I’ve got an idea that could be great for an ongoing series. Given Financial Samurai is an established site with a large community of investment savvy readers from all over the U.S. and the world, why not crowdsource our knowledge to see if we can make better investment decisions!
Real estate is my favorite asset class to build wealth long term because it is simple to understand, tangible, and rides the inflation wave. But buying physical real estate requires a large downpayment, ongoing property taxes, maintenance, tenant headaches, and often takes up a dangerously large percentage of one’s overall net worth.
Given I already have four physical properties, I’d like to diversify and reduce risk by surgically investing smaller amounts of capital in properties with higher rental yields from different parts of the country. San Francisco cap rates (net rental yields), for example, are only in the 2% – 4% range. This is where real estate crowdsourcing platforms come in. You can easily invest smaller amounts in different areas of the country with potentially much higher returns without betting the farm.
By 2Q2017 I will have a relatively large 4% CD in the amount of $340,000 coming due. Before then, I want to get comfortable with real estate crowdsource investing. My goals are: 1) geographic diversification, 2) beating a 4% yield in a low risk way, and 3) investing in commercial real estate given all my properties are residential.