Crowdfunded real estate investment companies have come into vogue recently as a way for individual investors who done have the bankroll to invest in the most attractive opportunities (commercial and large multi-family properties) to get into the market. At least that’s the idea. It sounds great, but does it work? On behalf of our users, we’re going to find out. We’ll be investing in some of the most popular options for crowd funded real estate and other alternative investments – RealtyMogul, RealtyShares, and YieldStreet. The first up is RealtyMogul. Here’s what happened…
The standard offering from RealtyMogul is their diversified REIT, which is open to all investors:
- Minimum investment: $1000
- Time horizon: 5+ years
- Target return: 8%
- Distribution frequency: Monthly
- Investment Type: REIT
Other opportunities are available to accredited investors who can show they meet certain minimum income ($200K annual income) and asset ($1M excluding primary residence) thresholds.
The cite was fairly easy to join and set up the initial investment. There were some forms and disclaimers that needed to be read and acknowledged, but the whole process took less than 30 minutes. The main caveat that needs to be kept in mind is that this is a long time horizon investment and is going to be illiquid over that period, meaning it may be difficult to withdraw money if you decide you want to take profits or cut losses. The REIT’s time horizon is 5+ years. The screen below shows the message you’ll get if you indicate any hesitancy about this feature.
It was a simple task to link to an existing bank account using the banks own website. We used Bank of America and were able to log in using our normal BoA user name and password.
After one month we received a notice of a monthly distribution of 8% (annualized) as promised. This is of course, only one month. We’ll keep you posted as time progresses.
Another thing that happened over the first month, is that we started to receive offers to invest in additional projects. The two offers below are more in line with the type of projects that are typically attractive to the individual investor, but require too much capital to get in at the entry level. Unfortunately, by the time we followed the offer link, these opportunities were closed.
All in all, investing using RealtyMogul has been a pleasant experience so far. Again, we’ll keep you posted going forward on the stability of distributions and what other opportunities arise. In the mean time, be sure to read our monthly Newsletter to find the best markets for investing in rental properties.