Passive Real Estate crowd funding?

[FIREin2018]

www.crowdstreet.com

Anyone use them or similar?

[Mr. Green]

My response regarding RealtyShares a while back, which is probably a similar crowdsourced RE platform that has since gone belly up.

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

Not covered in that response is my last investment, which ended up defaulting and I lost about $9,000 on the deal, which canceled out all the gains I made from the other 4 deals and then some. If you don't know what you're doing you can get burned with some of these platforms because you may have little control over who they lend to and how much visibility you have into the process. In the case of my last deal, RealtyShares ended up funding multiple deals with the same partner, but you didn't know that as an investor in just one of those deals. I would never have made the investment if I knew that was happening. The borrower did shady things with the money, then defaulted, and the recovery process is almost impossible. A court case was drug out over multiple years and it became clear that no one was going to get their money back so the case was dropped because it cost too much money to keep pursuing. The borrower basically got off scot-free in the end.

Investing in a single asset (building, shopping center, house, etc.) where the ROR isn't substantially higher than what you can get in the stock market is a terrible deal because there is serious risk. And by ROR I don't mean that "we'll pay you 8% and then give you a percentage of profits over X amount when we flip the property in Y years" bullshit. If the guaranteed ROR isn't in the teens, it's a shit deal, based on the risk of backing a single asset. And odds are it won't be in the teens because crowdsourced RE has made that style of investment so accessible to the "little guy" that most folks don't understand the true risk involved and think an 8% return with a potential kicker on the backend is a good deal.

If you're seriously considering crowdsourced RE I recommend you take some time to understand the process, what your recourse would be in the event of a default, etc.

[calimom]

I have a slightly older relative I recently helped move, and we got to talking about investments, real estate in particular. She's smart enough, and we both feel comfortable sharing experiences and financial details.

A few decades past, she and first husband had a house in an HCOL area of Southern California that had a big run-up in value. Thyey cashed out some equity and put what seemed like $50,000 toward a deal some friends were putting together to purchase a non-descript apartment complex in the Inland Empire. Like, one of the dullest deals you could imagine. I've seen the property. It's home to hard working and retired people who are solid and for the most part, pay their rent on time.

Relative has had this property for 30 or so years, and pulls in $1800 per month, with basically zero output. A few meetings a year. This may or may not be a unicorn situation. Look around us: apartment complexes, strip malls, and the like. An REIT is even easier but possibly not as lucrative.