Real estate is my favorite asset class to build long-term wealth. In my 20s and early 30s, I accumulated three properties in San Francisco and one property in Lake Tahoe. It was a great ride that earned me a small fortune, but after I turned 40 and became a father, I no longer wanted to spend time dealing with tenants, maintenance issues, and ever-rising property taxes. As a result, I sold one rental property to simplify life.
With the $1,800,000 in proceeds, I invested $550,000 in real estate crowdfunding through RealtyShares after already investing $260,000 on their platform a year before. Since 2016, I’ve earned an internal rate of return of roughly 15% a year from my 18 real estate crowdfunding equity investments around the country. What’s better, I’ve spent ZERO time having to deal with the properties after my investments were made.
I firmly believe real estate crowdfunding is a multi-decade investment trend that is just starting to take off. By crowdfunding capital, investors can now easily own a portion of multi-million dollar commercial real estate projects in promising cities with lower valuations, strong job growth, and higher net rental yields that were once unavailable.
The key is to invest with the best platform, and I think that platform is RealtyShares for accredited investors and Fundrise for non-accredited investors. An accredited investor is someone who makes at least $200,000 a year or has at least $1 million in investable assets.
Here are some detailed articles I’ve put together for those of you interested in real estate crowdfunding. Most were privately written for my due diligence needs. Once you’ve read all the articles, I’m confident that you’ll have more confidence diversifying your real estate investments as well.
Real Estate Crowdfunding Basics
Real Estate Crowdfunding Investing
Major Real Estate Crowdfunding Platform Reviews
As a real estate crowdfunding investor, it’s important to stick to the largest platforms. The largest platforms will garner the most amount of funding, attract the best deals, and also have the savviest investors.
I’ve personally met with the senior management of RealtyShares multiple times since they are based in San Francisco like I am. Meeting them face-to-face is one of the key reasons why I’ve been able to confidently invest a large sum of money with them. I really wouldn’t bother investing in any other platform other than the four that I’ve highlighted above.
As with any investment, only invest what you can afford to lose. Real estate crowdfunding is an illiquid investment compared to stocks, and carries risks. Utilize each platform to thoroughly analyze each deal and diversify your holdings so that you have at least five investments, if not 10+. Building wealth is about investing for the long-term, and I believe real estate crowdfunding is here to stay.
About the Author: Sam bought his first property in San Francisco on his 26th birthday in 2003. He liked real estate investing so much that he bought three more properties in San Francisco and one vacation property in Squaw Valley, Lake Tahoe. Real estate now makes up roughly 30% of Sam’s net worth. The rest is in stocks, bonds, private equity, and his business.
In 2012, Sam was able leave Corporate America at the age of 34 largely due to his investments that now generate roughly $220,000 a year in passive income. He spends time playing tennis, taking care of his baby boy, and writing online to help others achieve financial freedom.
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