The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: joshbrand111 on November 03, 2015, 08:16:46 AM
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Currently looking in to investing some money in real estate but don't have enough for a down payment on an investment property. Anyone on this blog ever use RealtyShares.com as a way to invest? I looks similar to Lending Club, but for real estate and was curious on everyone's thoughts on it.
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Why not just put it in a REIT, or a REIT ETF like SCHH for tax purposes?
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That is def. worth looking in to. REITS are a new area for me so excuse me if this is kind of a dumb question. What tax benefits are there to REIT ETFs?
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My understanding is that a REIT will cause you to have lots of taxable income if you keep it in a taxable account. A REIT ETF would ideally convert that income into higher value stock. I could be wrong as I have not done this type of investment myself.
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RealtyShares can be an interesting platform, depending on what you're looking for. However, you have to be an accredited investor (http://www.investopedia.com/terms/a/accreditedinvestor.asp) unless you want to lie on all the paperwork you have to sign each time you invest with them. I have several investments through RealtyShares. I like the platform and it appeals to me that I can get the details on a specific investment in a specific market and decide if that investment is right for me, without having to own 100% of the risk in that investment. There are both debt and equity deals, and some states limit what you can do. For instance, I can't invest in debt deals because or Maryland rules. You also have to understand 1st position vs. 2nd position debt/equity.
It can be a nice way to get some good returns if you're looking for alternative investments but are willing to risk your entire investment. My total investment with RealtyShares represents less than 5% of my whole portfolio and the investments I'm in are spread across geographic regions and the type of real state deal differs, further mitigating risk.
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Too risky, looks like gambling to me. I define gambling as putting money into something with a negative expected return. Blackjack has a negative expected return, but people do it anyway because it's fun and they hope to win. If that's what you're looking for, then go ahead, but I doubt you'll find much support in this forum.
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I know Nav, the owner of this funding platform, pretty well. I think this is one of the better run platforms out there. Fundrise and Patch of Land are others to consider.
The reason you won't find a lot of support for these types of investments on this forum is because people haven't researched them and are in love with indexing. That doesn't make them poor investments; it makes them different. The risk with investing via a funding platform is largely related to liquidity. You also have to know how to underwrite private deals and account for risk relative to the return they're offering.