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RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
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jbkunt2 Offline
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Post: #1
RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
Anyone using any of these or similar?

Or have any thoughts?

I want to give one or two a go but there are so many out there I don’t know which to pick.
03-08-2018 07:51 AM
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Arado Offline
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Post: #2
RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
Bump - in these chaotic times of Fed policy shifts, trade wars, negative interest rates in Europe, and yield curve inversions, it is worth exploring alternative investment vehicles.

Fundrise put out their market analysis in June, and it seemed pretty accurate given the turbulence that's entered the market since then.

Quote:All signs point to us being even later in the economic cycle
We continue to take precautions to manage risk across our portfolio
As we discussed in our letter last June, this is likely to result in it taking longer for returns to ramp up in the short term…
...but we believe it will ultimately produce better returns in the long run (something we have already seen pay off)

Last year, we noted that “the current US economic recovery was the second longest economic expansion in American history.” This year it officially became the longest on record, posting an unprecedented 105 months of consecutive job growth.

And like last year, it bears repeating that economies operate in cycles, with periods of expansion ending when asset prices reach unsustainable levels.

Looking at the same economic indicators that gave us concern 12 months ago, we don’t see a market that is coming back in line with fundamentals, but instead one that’s gotten even more out of touch with reality.

Here is how events played out since our letter last June:

Throughout the second half of 2018, apartment prices continued to rise along with interest rates, which made equity investments increasingly unattractive as spreads³ narrowed to on average 0.25% (see Exhibit A).

Given this dynamic, we ceased pursuing purchasing apartments or making other equity investments in Q3 2018. Instead, we focused primarily on debt investments, while also holding more cash on hand than typical.

Then in Q4 2018 the stock market collapsed, driving down asset prices and interest rates through early 2019. By Q2 2019, the resulting spreads between debt and equity for apartment buildings widened to 1.38% (see Exhibit A), which was 5.5x better than only six months before.

When asset prices and interest rates changed in early 2019, we moved aggressively to invest at far better economics than were available virtually any time the previous year, deploying $83 million to acquire eight apartment properties.

They seem to have a pretty solid investing philosophy, not promising sky high returns forever, and even cautioning that investors won't be able to pull their money during the next financial crisis.

Interested to hear thoughts - seems like a low hassle way to get exposure to real estate outside of REITS (which are traded on the stock market, so you get more liquidity but perhaps lower yields and high risk of the share price collapsing when the bubble bursts).
08-21-2019 10:20 PM
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conspirator Offline
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Post: #3
RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
The issue with those investments is liquidity
08-23-2019 04:14 AM
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Arado Offline
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Post: #4
RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
They are very up front about the lack of liquidity, esp in the coming recession. Question is whether this is a good investment for someone who doesn't need to recover principle for 5+ years and is happy with some small passive income on the side.
08-25-2019 10:33 AM
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Tail Gunner
Tail Gunner Offline
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Post: #5
RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
(08-21-2019 10:20 PM)Arado Wrote:  They seem to have a pretty solid investing philosophy, not promising sky high returns forever, and even cautioning that investors won't be able to pull their money during the next financial crisis.

I really like the truthful attitude, the recognition of reality, and their not feeding unrealistic expectations. It is rather refreshing.
(This post was last modified: 08-26-2019 11:35 PM by Tail Gunner.)
08-26-2019 11:34 PM
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Jaydublin Offline
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Post: #6
RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
I want to see how these do in another global liquidity crisis which I think is coming. Some will make it and some will not. What is important is the lessons that will be learned through the crisis.
08-27-2019 09:03 AM
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TheFinalEpic Offline
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RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
I'm in real estate (a broker) and the liquidity thing is the main issue. They are also generally focused on a project, where a REIT will be moreso spread over many different projects that are also in different asset classes. In theory, they are a good idea for SOME investors, but the fact about liquidity is massive. There are a couple syndicates in Vancouver that have folded and lost all investment.

As with all things, do your research. And contact a broker that is knowledgeable about the locations that these projects are commencing. I don't know a thing about X or Y city, real estate as an asset is hyper localized - they could be building in a ghost part of a city for all I know, so best to get the knowledge of someone who really knows whats up.

"Money over bitches, nigga stick to the script." - Jay-Z
They gonna love me for my ambition.
08-27-2019 04:31 PM
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Arado Offline
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RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
(08-27-2019 04:31 PM)TheFinalEpic Wrote:  I'm in real estate (a broker) and the liquidity thing is the main issue. They are also generally focused on a project, where a REIT will be moreso spread over many different projects that are also in different asset classes. In theory, they are a good idea for SOME investors, but the fact about liquidity is massive. There are a couple syndicates in Vancouver that have folded and lost all investment.

As with all things, do your research. And contact a broker that is knowledgeable about the locations that these projects are commencing. I don't know a thing about X or Y city, real estate as an asset is hyper localized - they could be building in a ghost part of a city for all I know, so best to get the knowledge of someone who really knows whats up.

That's a fair criticism which most youtube reviewers also discuss. Understood about the liquidity limits, but that's always the case when you are investing in physical real estate rather than a paper REIT, no? Anyone who would independently invest in real estate projects would face even stricter liquidity constraints I believe. This way, I don't have to do any work but still get the ownership.

My thinking is that by restricting liquidity they are able to follow through with projects and prevent panic selling, therefore the original investment will retain its original value better in a downturn vs. a REIT. Also, with Fundrise you are actually a part owner in the building, rather than with a REIT where you own the corporation that then invests the money, so it's one less layer.

Obviously this isn't something to put all of your funds into (and obviously don't touch this if you need the funds within a 5 year timeframe) but seems like a healthy way to diversify an investment portfolio into hard real estate assets without having to deal with the day to day headaches of owning real estate - taxes, toilets, and tenants.

I'm not a shill for them but seems like a legit way to diversify so curious to see if there is anything that I've missed.
08-28-2019 08:27 PM
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Tail Gunner
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Post: #9
RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
^
Listen any time there´s a middleman the chances of getting screwed increase exponencially. So checking the management is crucial. I´m thinking in about a 1000 ways for the middle man to screw you. Getting kick backs from deals is one of them.
BTW Realtyshares closed. And investors lost money.
I´ve looked deep into those sites and real estate crowdfunding in general. And for some reason I get the vibe of ponzi schemes. Or mismanagement of money. A REIT is much more regulated/transparent than a crowdfunding real estate operation. I don´t believe in a downturn they would have better performance. They would both sink. Probably higher default rates from crowdfunding. But management here is key.

What I´ve tried to do was buying buildings with friends/acquaintances. Not in common ownership. Everybody buys a designated flat. You arrive to the deed and each person buys their own. And afterwards do whatever they want with their flat. Even thought about a real estate site who would sell apartments like this.

You would put online the entire building with prices for each apartment. Even had a name for it. Real Estate supermarket. In the deed everybody would buy their own apartment. But the headaches with compliance and managing a team would not compensate. Also being public.
The advantage is reaching better deals. Generally speaking the higher the price, better the deal.

There´s not much to say. You see a building. Check how many apartments and livable building area of each unit. common living area is generally useless in setting price of flats (unless for garage, garden, etc). See for how much individual flats sell in that area. If they sell for more 50%. It´s worth it. I´ve done this only one time. Was going to do a second time but the bank screwed us in the foreclosure.

This is an example:

https://www.allsop.co.uk/properties/drur...ondon-wc2/
08-29-2019 04:24 PM
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TheFinalEpic Offline
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Post: #10
RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
With physical real estate, you get to reap the rewards of refinancing, using equity in properties, and building a portfolio that cashflows. You are able to manage it via your own company, and make decisions that permit you to buy more houses/units with smart purchasing and renovations.

These are just syndicates by another name, which is fine, and I'm not knocking the principle of crowdfunded real estate, but you can definitely have more control over a physical asset that you own and manage - plus the ability to take money out of that asset and reinvest it elsewhere.

my $0.02.

"Money over bitches, nigga stick to the script." - Jay-Z
They gonna love me for my ambition.
08-30-2019 11:17 AM
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Arado Offline
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Post: #11
RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
(08-30-2019 11:17 AM)TheFinalEpic Wrote:  With physical real estate, you get to reap the rewards of refinancing, using equity in properties, and building a portfolio that cashflows. You are able to manage it via your own company, and make decisions that permit you to buy more houses/units with smart purchasing and renovations.

These are just syndicates by another name, which is fine, and I'm not knocking the principle of crowdfunded real estate, but you can definitely have more control over a physical asset that you own and manage - plus the ability to take money out of that asset and reinvest it elsewhere.

my $0.02.

But is that greater control (and higher return) worth the hassle of managing it yourself and putting all your eggs in a couple of projects?
09-01-2019 10:55 AM
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TheFinalEpic Offline
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Post: #12
RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
(09-01-2019 10:55 AM)Arado Wrote:  
(08-30-2019 11:17 AM)TheFinalEpic Wrote:  With physical real estate, you get to reap the rewards of refinancing, using equity in properties, and building a portfolio that cashflows. You are able to manage it via your own company, and make decisions that permit you to buy more houses/units with smart purchasing and renovations.

These are just syndicates by another name, which is fine, and I'm not knocking the principle of crowdfunded real estate, but you can definitely have more control over a physical asset that you own and manage - plus the ability to take money out of that asset and reinvest it elsewhere.

my $0.02.

But is that greater control (and higher return) worth the hassle of managing it yourself and putting all your eggs in a couple of projects?

That's a question you'll have to answer for yourself. Personally, I can see both sides of the equation - where I'm coming from is that I would pick the assets that I invest in, just as I would do research into a company before putting money into it, I would do my own due diligence in each and every project, or with each and every house and unit.

"Money over bitches, nigga stick to the script." - Jay-Z
They gonna love me for my ambition.
09-01-2019 08:54 PM
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qwertyuiop Offline
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Post: #13
RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
I put $500 into Fundrise to check it out. I'm not liking it too much so far. I will probably pull out my money eventually and just toss it in a regular REIT.

The advantages of real estate are often the leverage (from a mortgage) which you don't get here. There are also massive liquidity issues that you don't get with REITs.
09-01-2019 09:56 PM
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Arado Offline
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RE: RealtyShares, CircleUp, CrowdStreet, Fundrise, etc.
(09-01-2019 09:56 PM)qwertyuiop Wrote:  I put $500 into Fundrise to check it out. I'm not liking it too much so far. I will probably pull out my money eventually and just toss it in a regular REIT.

The advantages of real estate are often the leverage (from a mortgage) which you don't get here. There are also massive liquidity issues that you don't get with REITs.

I think you have three months to pull your money, but perhaps you have longer with just a basic account.

Good point about the mortgage - anyone here have experience as a retail investor borrowing money to buy assets outside of a standard mortgage? If interest rates are going to be super low (or even negative) for the near future, then it could be worth it, with Central Banks printing like crazy and hyperinflation likely in the not too distant future.
09-03-2019 07:45 PM
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