Author Topic: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?  (Read 3893 times)

retiringearly

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Hi - Have any of you invested through the online real estate crowd funding platforms?  I would like to hear any feedback from your personal experience.

I currently invest through RealtyMogul.com, Fundrise.com, and RealtyShares.com.

I have made some equity investments, but mainly debt investments.  So far (2 years) my experience has been very positive.  No unwelcome surprises, everything going as advertised.

Thanks

martyconlonontherun

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #1 on: September 16, 2017, 05:24:28 PM »
Bumping and old thread since I saw an add for fundrise. Looks shady but interesting. Anyone have experience?

alexpkeaton

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #2 on: September 16, 2017, 08:47:46 PM »
I've got ~$25k in PeerStreet and $5k in Groundfloor.

I'd posted a longish review of PeerStreet on another (private) forum, but can repost it here if anyone is interested. The TL;DR version: So far so good, one loan has gone bad which is still awaiting resolution, but until then I suppose PeerStreet can continue advertising having no losses. No idea how much I'll recover on that loan after lawyers take their cut. I keen an XIRR calculation in a spreadsheet which is showing ~8.5% annual returns this year, but that doesn't account for the bad loan since I don't know how much to mark it down.

Groundfloor seems ok, but there haven't been any loans to fund in some time. Not sure what's going on there.

Mr. Green

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #3 on: September 17, 2017, 02:56:24 PM »
My detailed response about RealtyShares to someone asking this same question in January...

https://forum.mrmoneymustache.com/investor-alley/realtyshares-and-fundrise-thoughts/msg1374265/#msg1374265

The general trend, as more people have piled on to the crowdsourced real estate bandwagon, is that rates are coming down to levels that do not reflect the real risk of the investments. People see an 11% ROR for a 5 year deal on a commercial shopping center and their eyes get big, when the reality is that can be an extremely risky, illiquid investment. In the two years I've invested I've seen enough of a behavior and rate change that I will not be investing any more in crowdsourced real estate. I'm just not convinced that enough of the investors actually know what they're looking at and so it's easier for them to be misled, which is just a ticking time bomb the next time there is a real estate pull back somewhere.

A good example would be a fund in the Boston area I'm still in for 10k. The sponsor turned around and raised another million after his first $1.5 million in my fund and used that, coupled with very limited money of his own, as the equity portion of a $20 million loan. The sponsor bought a whole mess of properties and ended up running out of cash part way through. The portfolios are worth more than they were bought for so thankfully everyone should get what's owed them but it has been months since a proper interest payment has been made and I won't see another dime until the portfolio is sold to another investor who has the cash to finish the job this guy started. Had I known even more leverage would have been sought by the sponsor after the first round I wouldn't have considered investing. This is just one example of the things you have no control over in the corwdsourced RE game. This example is also about as illiquid as it gets, but I suspect most people investing don't have a clue about what can actually happen when things don't go well.

If I ever considered it in the future it would be first lien debt only, since that is the first creditor paid if a deal goes bad.
« Last Edit: September 17, 2017, 03:13:39 PM by Mr. Green »

retiringearly

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #4 on: September 19, 2017, 10:09:19 AM »
An update on my experiences:

My investments through online real estate have been through RealtyShares, PatchofLand, Fundrise, RealtyMogul, and PeerStreet.

The vast majority of my investments have been in first lien loans.  I haven't had any real negative experiences other than some loans being paid late (but they then were charged penalty interest).  I have one loan on a property that has defaulted and is now working its way through the court system.  I am not too concerned about it, I will get my principal back, plus some of the interest.  The borrower has a few hundred thousand of his own cash in the deal which he will forfeit if foreclosure happens.   That equity should cover attorneys/court costs/marketing costs of the property.

I have not added to these investments in several months.  I am pulling my money out when loans are paid off.  I don't want to be a lender when it seems like we are close to a market top in real estate. 

retiringearly

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #5 on: September 19, 2017, 10:11:06 AM »

The general trend, as more people have piled on to the crowdsourced real estate bandwagon, is that rates are coming down to levels that do not reflect the real risk of the investments.
I agree about interest rates coming down.  Some of the rates being offered on PeerStreet are crazy low.  It is part of the reason I am not making any more loans.

Scandium

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #6 on: September 20, 2017, 12:53:26 PM »
I'm unclear, are these sites basically for lending money to people who have business plans that are so bad that banks won't lend to them?

MsSindy

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #7 on: September 20, 2017, 01:24:24 PM »
I'm unclear, are these sites basically for lending money to people who have business plans that are so bad that banks won't lend to them?

No.  Think of it more along the lines of a hard money lender.  These platforms provide quick turn-around for people wanting to do deals - that's the main draw.  The business plans and credit are screened (how good a job the platform does is the question).

MsSindy

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #8 on: September 20, 2017, 01:27:28 PM »
I've invested with Realty Shares coming up on a year.  I have 2 debt deals and 1 equity deal.  So far, I have received all my interest payments and have had no issues.  All the deals are with retail or hotel property, no single family residential.  I'm more comfortable with the debt deals, as I feel they are more secure, and that's where I will probably invest in the future.

The first deal is coming up on 12 months, so it will be interesting if they exercise the additional 6 months, or if they were able to execute their exit strategy.

Heroes821

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #9 on: September 21, 2017, 11:23:47 AM »
I know a few friends who have "play money" in Fundrise, they are enjoying the returns so far, but I don't think they have a full grasp on how illiquid it is.

I haven't used Fundrise, but I have tested Lendingclub and I've been attempting to liquidate only $3000 since March and I'm still not done selling my notes.  Even if the returns were like 1000% it's not worth it imo if it takes you a year to get your money into cash.

retiringearly

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #10 on: September 21, 2017, 03:38:31 PM »
I'm unclear, are these sites basically for lending money to people who have business plans that are so bad that banks won't lend to them?

These are either loans to people that want to fix & flip real estate, or equity investments into real estate projects (buying apartment complexes, etc.)

elvizzle

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #11 on: September 21, 2017, 03:43:30 PM »
I put in $10k on one of the RealtyShares equity projects as a test run.  The investment closed in 8/16 and is supposed to exit 8/19.  I have had $2,000 paid out to me so far.  We'll see how it goes...

Scandium

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #12 on: September 22, 2017, 01:30:17 PM »
I'm unclear, are these sites basically for lending money to people who have business plans that are so bad that banks won't lend to them?

These are either loans to people that want to fix & flip real estate, or equity investments into real estate projects (buying apartment complexes, etc.)
Yes, but if those people have a viable business plan why don't they just get a bank loan?

spud1987

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #13 on: September 22, 2017, 01:40:12 PM »
I haven't invested for two reasons: (1) too illiquid and (2) untested market.

Back in 2012 I put 5k in LendingClub. This worked well for the most part. However, for the two reasons above I stopped making loans in 2014. My returns have been around 7.5%, but I haven't experienced how these investments would perform in a recession.

Real estate crowdfunding is similar, although less risky than Lending Club since the loans are generally secured by real property. As others have said, people who invest in these are locking up capital for an extended period of time with returns that often don't justify the risk. It is also unclear how these investments will perform in a flat/down real estate market.

alexpkeaton

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #14 on: September 22, 2017, 08:41:12 PM »
Yes, but if those people have a viable business plan why don't they just get a bank loan?

Banks have more onerous requirements (read: higher underwriting standards). Flippers want to close quickly and get to work. Time is money.

I used to work for a real estate developer who borrows money at around 9%. Going through banks requires a lot of work at every stage of building. Do some work, pay the subcontractor, provide the bank proof the work was completed so you can make your next draw. Sure, you'll pay a lower interest rate, but there's a tradeoff.

Timodeus

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #15 on: September 28, 2017, 07:06:19 AM »
I just took a baby step and put $500 into Fundrise's "Starter Portfolio" which equally divides your investment into their Income (primarily debt investments) and Growth (primarily equity investments) eREITs. I don't plan to add more until I hit some more milestones with my main retirement portfolio and see how their platform deals over a longer period of time. Since I'm renting I like the thought of having some investment more directly in property so as to capture rises (or falls) in property values. The one thing that attracted me to Fundrise over say Rich Uncles is that many of their assets were residential focused and not solely commercial, along with the fact that I can deposit smaller sums than buying properties myself. I'd just buy VNQ for that.

degrom7

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Re: Have any of you invested through RealtyMogul, RealtyShares, or Fundrise?
« Reply #16 on: September 23, 2018, 07:38:36 PM »
How did it turn out after a year?