RealtyShares and PeerStreet are two popular real estate crowdfunding platforms that you can use to invest in real estate online.
Real estate investing is so simple and easy now a days. Unlike before, you now can get a piece of the action WITHOUT having to physically manage a multi-family or commercial property.
You don’t need to secure a massive bank loan and put thousands and thousands of dollars into a single property.
You can quickly add real estate to your portfolio and diversify across a variety of asset classes.
Sounds great, right?
I want to take a second in this blog post to introduce you to two of the most popular ways to get stared with real estate investing.
I also want to go into some of the similarities and differences between these two popular websites.
If you’d like more information, my book, Real Estate Crowdfunding Explained, goes through some of the other websites that you can use to get started investing in this industry.
Over $500 million has been invested on RealtyShares across more than 1,000 deals. The platform has also returned $80 million of principle to their investors.
These guys see a high degree of volume.
What I like about RealtyShares is the opportunity for broad diversification. You can diversify your investment across:
- Asset types like multi-family, retail, office, single family homes
- Geographic locations including over 220 cities
- Offering types like senior debt, equity, and preferred equity
- Varying risk-return opportunities and hold periods
While this is great, at the same time, there is always that fear of crappy investments.
Am I right?
I mean, Bitcoin is cool, but it’s really just speculation. It’s difficult to understand the fundamental intrinsic value of the asset and why it justifies such a high valuation.
When you invest on RealtyShares, you know that you’re investing in HIGH QUALITY assets. Fundamentally, the website turns away 95% of the applications they get for funding.
Considering that they’re getting ~2,500 applications per month and seeing 5% of those, you’re really gaining access to the cream of the crop.
These are highly vetted investments that go through rounds of pre-qualification and due diligence.
So… what’s the catch?
Haha… there is always a catch.
The catch is that you MUST be an accredited investor to be able to use their platform.
An accredited investor is someone who meets ANY ONE of these critera:
- Earns more than $200,000 per year.
- Has a net worth of more than $1,000,000 (excluding your house)
- Has a joint income with their spouse of more than $300,000.
- Institutional buyers
- Qualified purchasers
- Entities that have $5 million or more in assets, like a venture capital fund.
If you’re not an accredited investor, then you can’t invest on RealtyShares. Sorry!
PeerStreet
PeerStreet is an online investment platform that you can use to get access to get some portfolio exposure to the real estate marketplace.
Using this marketplace, you can invest in debt or fixed-income investments. Basically, you’re investing in real estate backed loans.
Your funds are then used as a loan to the company seeking funding. They might use it to purchase property, improve property, or acquire property.
No matter how they use it, you’ll get regular checks as they pay back their loan!
There are several key differences between PeerStreet and RealtyShares. The first is the asset class that you’ll gain exposure to.
PeerStreet only offers debt investments with a 6 to 24 month horizon. You won’t gain any kind of capital appreciation with your funds. But, you’ll be trading this risk for regular consistent returns (between 6 – 12% annualized).
RealtyShares does offer senior debt investments, but they also offer equity and preferred equity options.
Who is PeerStreet best for?
Overall, I think that PeerStreet is a great alternative to websites like Lending Club. It’s good for investors that have less of an appetite for risk and want to ensure the security of their capital.
If you want to experience consistent returns from a fixed income investment that is backed by real estate, then I’d look into PeerStreet.
Just remember… you must also be an accredited investor to use this platform.
If you have more of an appetite for risk and want to experience greater returns or capital appreciation, then I don’t think that PeerStreet is for you.
At the end of the day, it comes down to YOU, the investor.
The great thing about real estate crowdfunding and online real estate investing is that you can actually invest on multiple platforms.
You can devote a portion of your portfolio to RealtyShares and a portion to PeerStreet.
This way, you’re taking advantage of both marketplaces at the same time!
