RealtyShares is one of the top real estate crowdfunding websites out there! They’ve raised over $200 million in capital through their website for residential and commercial properties.
Ever since writing the Amazon ebook, Real Estate Crowdfunding Explained I’ve been getting a lot of questions about which is the absolute best platform out there to invest with.
In this review, I’ll cover some of the pros and cons of the RealtyShares platform, along with what you need to know as an investor if you’d like to make more online real estate investments.
RealtyShares is a real estate crowdfunding website that was founded in 2013. Thus far, the company has raised over $30 million in venture funding, along with a $30 million line of credit.
Using the website, you can access vetted real estate investment opportunities, including both commercial and residential properties. At the time of writing, the platform has enabled over $200 million worth of financing over 400+ investment opportunities and it’s attracted over 25,000 investors.
According to the CEO, Nav Athwal, “Commercial operators, particularly in the multi-family sector, have embraced this new model as a way to raise equity and debt capital for projects…
Multi-family projects are an important part of our eco-system, but we also have high hopes for other commercial products like retail shopping centers, office buildings, and self-storage facilities”
In the second quarter of 2016, the company did $43.6 million in deals and “welcomed 4,500 new accredited investors in August, helping to raise $9 million across several deals in a single week.”
It’s clear that both real estate crowdfunding and RealtyShares are growing!
At the time of writing, only accredited investors can invest on RealtyShares. You qualify as being an accredited investor if you:
- Have an individual net worth or joint net worth with your spouse that exceeds $1 million, excluding the value of your primary residence
- Have an income exceeding $200,000 per year in the last two years or a joint income with your spouse exceeding $300,000 per year, with reasonable expectation that you’ll earn the same amount this year.
Basically, you must be a wealthy individual, as these investments are more risky than investment options, like stocks and bonds, that are accessible to the general public.
What are the benefits?
One of the huge benefits of investing in real estate through RealtyShares is that you’ll be able to choose the individual properties you invest in, without dealing with all of the management of those properties. You can choose from between residential and commercial deals, along with debt and equity investments.
Rather than having to deal with annoying tenants, management headaches, and property costs, a proven management team will deal with the day-to-day operations of the property. You can sit back and enjoy the passive income from the equity, preferred equity, or debt investment. You can also invest in properties around the country, as shown below.
If you’ve been interested in getting into real estate investing, but don’t want to commit to outright buying a property and managing it, then I think real estate crowdfunding is a good choice. You’ll be contributing to the financing of the deal alongside other accredited investors and share in the risk.
What are the drawbacks?
Unfortunately, there are some drawbacks when it comes to both real estate investing and RealtyShares. In my mind, the biggest draw back is that the offered securities are not publicly traded, meaning that they are illiquid investments. They can’t be easily sold or converted into cash.
The hold period for an investment investment can range between 6 months and 5 years (or more). This isn’t the right avenue to go down if you want to get an ROI a month from now!
The other big drawback is that you can only invest on RealtyShares if you’re an accredited investor. These are high net worth individuals, as described in the section above.
Finally, while you will be getting updates for equity investments on a quarterly, or in some cases, monthly basis, that doesn’t change the fact that you MUST do your homework before entering into any deals. Don’t just assume that because an investment is offered on the RealtyShares platform that it’s a good investment. Look through ALL of the information contained in the deal, do a google search regarding the management company/property, and try to gather as much information as possible.
Where should you go from here?
If you’re an accredited investor, I’d take a sec to sign up on RealtyShares and get a feel for how the marketplace operates. You’ll be able to check out some of the offered deals and become familiar with the information that’s available.
You aren’t under any kind of obligation to invest when you sign up, but if you choose to, there are investment minimums as low at $5,000 and even $1,000 for some deals.
To further break down this platform, I’ve put together a YouTube video that talks about the platform in-depth, along with some of my thoughts regarding Real Estate Crowdfunding. I hope that you enjoy it, and if you do, give it a thumbs up on YouTube! I hope you enjoyed this article. Also, I am a part of the RealtyShares affiliate program, as I support real estate crowdfunding (and wrote an ebook on the topic). This post contains affiliate links.
