Streitwise takes advantage of new federal regulations to make commercial real estate investing accessible for everyone.
It’s an amazing platform for you to discover properties across the United States that show real promise in producing healthy cash flows and returns.
In this article, we’re taking you through some of the major pros and cons of Streitwise, as well as how you can use them as part of your investment strategy.
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How Streitwise Works
The Streitwise real estate crowdfunding website gives retail investors access to institutional-quality commercial properties.
They handle the end-to-end management of the properties, including:
- Finding of properties
- Sourcing quality tenants
- Collecting rents
- Handling the paperwork
All you have to do is participate in one of their offerings for a minimum of $1,000, and they’ll take care of the rest.
Of course, it’s important to look extensively through the offering circular which completely outlines the deal.
You will then experience pass-through dividends from commercial property rents on a quarterly basis. Your initial investment may appreciate over time, which can be realized if or when the property is sold.
Unlike REITs, these investments are not publicly traded, meaning that you’re getting access to a public non-traded REIT.
After one year, you have the ability to participate in their Stockholder Redemption Plan (more on this later in the post).
Pros of Streitwise
There are many benefits that come along with investing through Streitwise.
First of all, the team has a wealth of management experience when it comes to commercial real estate properties.
The company is led by three founders who possess a combined 40 years of experience in real estate — not to mention they have accumulated over $5.4 billion of real estate investing know-how.
Simply put, the team follows a proven value-oriented investment strategy that focuses on acquiring commercial properties that produce real cash flow.
Unlike other investing platforms, the team actually manages the properties that they acquire. In effect, they act as sponsors in a deal. All the profits are passed along to you.
This unique structure is what contributes to fees that are lower than REITs you might find online.
Typically, you might find fees including:
- Offering Fees: Streitwise charges a one-time 3% fee
- Management Fees: Streitwise charges a flat 2% management fee
- Transaction Fees: Streitwise charges no transaction fees
This fee structure is notably lower than the industry average. And when browsing their platform, you can rest assured that all fees are taken into account before dividend distributions.
This means that any dividend referenced on the website is net of fees.
Lastly, a major pro to investing in public, non-traded REITs is the special tax advantage that you’ll get as an investor.
- You won’t experience corporate taxes. Instead, all dividends that are distributed will simply pass through to investors.
- You get to deduct 20% from the dispersed income. This will lower your taxable income.
These tax advantages are only unlocked in the non-traded REIT adheres to the 90/10 rule — meaning they distribute the majority of their profits. Streitwise has made a commitment of abiding by this rule.
Cons of Streitwise
There are also some drawbacks that you should be aware of when it comes to investing in a public, non-traded REIT like those provided by Streitwise.
First of all, because the REITs are not publicly traded, it’s going to impact the liquidity of your investment.
You won’t be able to easily go on an open exchange and receive cash for your investment.
That being said, there are opportunities to trade in your investment after a set period of time. There’s a one-year lockout period and then you will have a quarterly option to participate in a Stockholder Redemption Plan subject to certain restrictions that are fully explained here.
You can redeem your shares after a period of one year. During that year, you will experience cash flow distributions.
Another con of Streitwise is that the investments are limited to commercial real estate.
If you want in other areas like the single-family housing market, raw land, or other forms of real estate investment, this is not for you.
A final drawback is that you won’t have the same control over a property as if you were the landlord. You should expect to give up day-to-day management of the property in exchange for a more hands-off approach.
Depending on your goals as an investor, this could play as a pro or a con. So take some time to consider how you’d like to invest and then make a move on Streitwise properties if it seems like a good fit.
Should You Invest in Streitwise?
If you haven’t yet considered alternative investments as a part of your portfolio, then this platform could be a great option for you.
Their current offering has a target dividend of 8-9% for 2021, and they have a great track record of making good on their projections.
Of course, it’s important to note that past results are no indication of future results.
Using its proven investment strategy, the Streitwise Sponsor has generated an average annual return of 33.1% on its realized investments, dramatically outperforming other public and private real estate investment managers.
These are great returns by any standard. But as with any investment, nothing is guaranteed.
If passive-income investing is your goal, make sure to look into Streitwise!
Important Conclusions
The real estate crowdfunding market is hotter than ever before.
For more information about what real estate crowdfunding actually is, visit this article.
Additionally, founder of CrowdCrux Salvador Briggman has a great book — Real Estate Crowdfunding Explained — that goes way more in depth about everything you need to know regarding the industry.
You should also:
- Subscribe to Sal’s Youtube Channel
- Check out the Crowdfunding Demystified Podcast
- Join the CrowdCrux weekly newsletter
For more awesome insider information!
We hope that this article has been helpful for you as you consider investing with Streitwise. Good luck on your real estate crowdfunding journey!
And remember, CrowdCrux is always here to help.
