Author Topic: Thoughts on Crowdfunding Real Estate Lenders?  (Read 10929 times)

mo

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Thoughts on Crowdfunding Real Estate Lenders?
« on: March 28, 2016, 10:53:48 PM »
Has anyone tried any of the budding real estate investment platforms that are starting to be offered to small investors under the new Reg A rules that allow them to crowd source investments?  A few that I've seen are

FundRise
GroundFloor
RealtyShares

Curious on peoples experience with any of them.  FundRise supposedly has a waiting list but they also had some sordid affair with their CFO recently where he accused the company of fraud and they accused him of extortion.  I checked out GroundFloor a while back and it seemed dead.  Just saw an ad for Realty shares when researching the other two.

Fred93

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #1 on: March 28, 2016, 11:13:41 PM »
I'm a groundfloor investor.  The guys there are great.  The product is well designed.  A few new loans appear every week or so.  You have to be patient.  Many loans disappear within an hour or so of being posted, so in addition to being patient, you have to be quick.

The way the new reg A rules work, they have to submit a document to the SEC for every batch of loans, and then wait an unspecified time until the SEC gets around to looking at it and ok'ing it.  As soon as one of these pops out, groundfloor posts the loans same day.  You can look on the sec.gov web site and see the queue of these documents waiting to be approved.  I think they're going to have to get some improvement in this process from the SEC, as it is just too cumbersome at present.

The principals are great.  They take time to explain things to me, answer questions, discuss suggestions.  However, this is a startup, so there are risks and of course limited loan volume right now.

As they get this process with the SEC to operate more smoothly, I think they will be a fine place to invest.  Membership is by invitation, ie you have to send them an email asking to be let in.  I suspect they have about 350 investor members, just based on the count of investors in individual loans.  Given the limited supply of product, that's plenty for right now.  To be sustainable, they need to get the SEC wrinkles worked out, so product flow can scale up.  I don't think they'll have any trouble finding investors.

rockinray

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #2 on: March 29, 2016, 08:13:23 AM »
I'm doing the Fundrise Income eREIT for a test. Cannot say too much about it yet.

We are due our first dividend payment in mid-April.

So far so good, and hope this goes well for the long term.

Half Right

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #3 on: March 29, 2016, 12:42:02 PM »
I requested a groundfloor invite a while back but i think they can only invite based upon states they are approved in.  Fundrise has been excellent so far but i am being very careful for the coming shake out

mo

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #4 on: March 30, 2016, 12:12:04 AM »
I'm doing the Fundrise Income eREIT for a test. Cannot say too much about it yet.

We are due our first dividend payment in mid-April.

So far so good, and hope this goes well for the long term.

I ended up putting in the minimum investment with Fundrise.  I like that you don't have to invest in individual loans like with GroundFloor.  The possible ethics issues at Fundrise worry me though.  I also don't like that their advertising tactics are a bit sleazy.  I found them through an ad on Mint and they said I only had 1 hour from clicking the ad to sign up if I didn't want to be put on their waiting list.  A bit high pressure for my taste.
« Last Edit: April 06, 2016, 11:59:20 PM by mo »

rawraw

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Thoughts on Crowdfunding Real Estate Lenders?
« Reply #5 on: March 30, 2016, 06:32:03 AM »
I've only looked at Fund Rise. Just based on their marketing information, I expect it to be a train wreck.  This stuff is getting a little nuts.  I look at what is happening in China and worry it'll start here

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nonattender

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #6 on: March 30, 2016, 07:24:57 PM »
In general, real estate people scare me, so, there's a high burden there to be overcome regarding my comfort level in trusting RE folks...

It's probably, partly, an artifact of the entire RE industry seeming to me to be in the business of inventing charming (small) ways to lie. :)

Too early for me, though I do like hearing stories like Fred93's about the pioneers in the market.  I'll wait for "settler" stagecoaches, tho.
A little nonsense now and then is relished by the wisest men.

ggnoob1337

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #7 on: March 30, 2016, 09:49:14 PM »
I'm doing the Fundrise Income eREIT for a test. Cannot say too much about it yet.

We are due our first dividend payment in mid-April.

So far so good, and hope this goes well for the long term.
Same. I have a little money in here. Missed out on their new Growth eREIT and not sure if I'll add any more money or not at this time.

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Fred

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #8 on: March 31, 2016, 02:50:49 AM »
I'll wait for "settler" stagecoaches, tho.

Me too.

I opened an account with RealtyMogul, but never deposited money to it.  Seemed too time consuming to pick the right investments.

If I were to put money in real estates, I'd probably just buy REITs, or a rental property within 20 miles from my place.

Fred93

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #9 on: March 31, 2016, 03:17:37 AM »
I opened an account with RealtyMogul, but never deposited money to it.  Seemed too time consuming to pick the right investments.

Same here.  I opened an account, but after looking into RM, there seemed to be several problems, and I never invested.  The investments aren't standardized.  Some are debt.  Some are equity.  The deals vary in structure, requiring you to invest time in understanding each.  Their legal paperwork seemed inadequate to me.  (I'm not a lawyer, so take that for what its worth, and do your own reading.)  You have no "account" at RM to deposit money into.  Each time you invest in a deal,  you have to transfer money specifically for that deal!  They are into running a small number of large deals, so there never seemed to be more than one open at a time.  Right now for example, they have exactly one debt deal open.

RM hadn't done the background work necessary to make this workable for the investor.  The only similarity to Lending Club, Prosper, Groundfloor, etc is that RealtyMogul has a web site.  Except for the web site, it seemed like their ways of doing things were all old school.

I'm shocked every time I see their CEO give a talk or an interview.  Shocked that anyone gives her any credibility at all.

I predict they will fail.

andy3109

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #10 on: April 02, 2016, 02:22:25 AM »
I am in about 200K between patchofland and realtysharesóbeen at it since early 2014. I have anywhere from 5K to 40K per deal (usually 10K). The 4 equity deals have returned an average of shit (~4%), while the debt deals have all paid out. I average about 11% before tax return on 12-24 month debt deals.

To be honest, the first position debt is relatively safe if you know the things to look for. It's the mez. debt that scares me (which of course comes with a higher APR). You'll get a schedule K for each investment at the end of the year.

If you choose to do equity, take all their optimistic numbers (sale price, rental income, etc.) and reduce them by 20-30%. Are you still happy with the return? If so, go ahead. I have two equity deals that are paying out 0$/month ATM because of income shortfalls.

reidy83

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #11 on: April 05, 2016, 09:08:21 PM »
I have been investing in P2P Real estate sites since early 2013. I am an accredited investor so this response may not be applicable to everybody. I have reviewed 50 sites, tried 12 different platforms and have settled on 5 to 6 main sites for my P2P real estate investing.

Currently, I have invested in just over 100 deals with 60% debt positions and the remainder equity. Almost half of these transactions have been fully completed (principal & interest) with very good monetary gains. Of the 45 or so completed deals, the average return has garnered a 9.75% annual yield which is roughly 1% higher then my 8 years of returns thru LC/Prosper. The amazing thing is that I have yet to lose any principal which I cannot say the same for in my consumer lending experience.  I know many long time Lend Academy bloggers think that this type of platform is too risky but I have had good results thus far.

Below are the list of companies that I have spent the most time with in the past 3 years:

o   Realty Mogul
o   Patch of Land
o   Ifunding
o   Realty Shares
o   Fundrise

I will have a blog out next week to review these companies against each other.......

nonattender

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #12 on: April 05, 2016, 10:20:59 PM »
The amazing thing is that I have yet to lose any principal which I cannot say the same for in my consumer lending experience.

"My new girlfriend never gets mad at me - unlike my wife of 10 years who harps on me whenever she thinks I'm being unrealistic."
A little nonsense now and then is relished by the wisest men.

rockinray

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #13 on: April 14, 2016, 07:53:06 AM »
I'm doing the Fundrise Income eREIT for a test. Cannot say too much about it yet.

We are due our first dividend payment in mid-April.

So far so good, and hope this goes well for the long term.

I got my first eREIT dividend. After reading about some internal Fundrise issues, I was a little concerned.

Currently, they claim 13 properties in the eREIT but they have yet to update the webpage.


rawraw

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Re: Thoughts on Crowdfunding Real Estate Lenders?
« Reply #14 on: April 14, 2016, 09:39:56 AM »
The amazing thing is that I have yet to lose any principal which I cannot say the same for in my consumer lending experience.

"My new girlfriend never gets mad at me - unlike my wife of 10 years who harps on me whenever she thinks I'm being unrealistic."
It's amazing to me how people evaluate risk. Frequent small losses = risky. Infrequent, large losses not yet experienced = not risky.  Surely there is a little more than this to the risk

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