Question: Between Investing in Real Properties vs REIT vs Crowdfunding Which is Best and Why?
Option 1: Real Properties - Single Family Rental investments
Option 2: REIT or mREIT Investments
Option 3: Crowd Funding like Fundrise & Realty Shares
I only have experience investing in physical real estate and REITS and know very little about the eREIT or the Crowdfunding space. I wanted to ask you guys between investing in Real properties, REITs, and Crowdfunding Platform, which asset class is the best? Personally without the ability to leverage, I don't believe Real properties is a good investment. However, in terms of tax benefits and the ability to leverage, investing in Real Properties > REITS in my opinion.
For example, you cannot put down 25% and leverage 75% on a REIT? Not sure if you can put down 25% and leverage 75% in crowdfunding platform like Realty Shares. Is investing in Realty Shares just like buying a REIT in a Charles Schwab reinvesting the dividends to buy more shares? The advantages of investing in REITs is its liquidity as you can sell your shares at anytime without a holding period.
I've heard that there is a holding period in the Crowdfunding space and would like to hear from others who have invested in the Crowdfunding space and what their personal experience has been. i.e. Realty Shares and Fundrise etc. What are the PROs, CONs, and risks investing in Crowdfunding? This is an area I don't know much about and would be interested to learn more about it.
I love owning physical real estate in the city I live in. Once I'm long there, including a primary residence, then I look to diversify through public REITs, private REITs, and crowdfunded deals.
I don't want all my real estate exposure tied to the Bay Area, although it has been good. I want to find the next Bay Area to buy real estate.
I've REIT and crowdfund but don't have physical property. Still don't know where to live
The good thing about crowdfunding is I don't need to worry about price fluctuation like in REIT and higher dividend from what I've seen so far.
The bad thing about crowdfund is they are new so haven't been tested by recession yet.
What do you mean by BEST? If you're talking about best returns, then its real property and you've left out multiple asset classes: Retail, Industrial, Office, Multi-family, etc. Of course, real property is also more work and risk.
Generally, industrial has been on fire in the last decade due to the growth of eCommerce. Retail and office have been a bust.
Multi-family has done extremely well, and this is where I'm invested. I like it because:
1. It takes less expertise to manage than the other commercial asset classes--there are many "mom and pop" apartment landlords; I use a management company anyway
2. You can use leverage; I like deals with 25% to 30% down.
3. The tax benefits are great; even better if you can claim yourself as a real estate professional
4. You're in control compared to the more passive real estate investments; this benefits above average investors/operators
5. On a cost per door basis, multi-family costs less than single family.
6. Multi-family has better cash flow than single family; high rent yield per dollar invested.
7. Loan approval is more highly dependent upon the cash flow of the property rather than your personal income; this is especially advantageous for self-employed people who find it difficult to get loans on single family homes.
The biggest downside of multi-family loans are that they are are typically 3, 5 and sometimes 7 year ARMs. If feels like I'm refinancing all the time, but it also allows me to cash out and reinvest the proceeds.