Real estate crowdfunding is one of my favorite ways to generate passive income. As a result, I’ve spend hundreds of hours creating the real estate crowdfunding learning center for all potential investors.
I’ve currently invested $810,000 since 2016 in real estate crowdfunding to help me generate more passive income. My favorite real estate crowdfunding platforms are Fundrise and CrowdStreet. They are both free to sign up and explore.
Real Estate Is A Great Asset Class
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 re-invested $550,000 in real estate crowdfunding to earn passive income from lower valued heartland real estate with much higher net rental yields.
Due to the remote work trend, especially after months of lockdowns in 2020, I strongly believe there will be a long-term demographic shift towards lower cost areas of the country.
Since 2016, I’ve earned an internal rate of return of roughly 12% a year from my 18 real estate crowdfunding equity investments around the country. The real estate crowdfunding investments have provided for a solid way to diversify my real estate portfolio.
What’s better, I’ve spent ZERO time having to deal with the properties after my investments were made. What a blessing!
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.
Real Estate Opportunities Today
Now with the stock market aggressively rebounding after a big decline in 1Q2020, there’s an opportunity to buy real estate from sellers who still think the world is going to end. I’m personally on the hunt to buy more property during the 2020 lockdowns.
The key is to invest with the best platform, and I think Fundrise is today’s best platform for non-accredited investors. They were founded in 2012 and are the pioneers of the private eREIT. They have also created a new Opportunity Fund to take advantage of recent tax law changes.
For accredited investors, those who earn more than $200,000 or have a net worth of over $1,000,000, I like CrowdStreet the best. I met their team before the lockdown and liked their focus on investing in 18-hour, secondary cities.
CrowdStreet has a direct-to-sponsor model, which allows for more efficiency and greater transparency. CrowdStreet is also focused on emerging 18-hour cities, which is where I believe there is the most opportunity. They were founded in 2014 and are based in Portland, Oregon.
Below is an example of a commercial real estate investment on the CrowdStreet platform. Interest in self-storage and data centers is very strong now thanks to remote work. To find out more, you can click on the image.
Real Estate Crowdfunding Learning Center
Below are some detailed articles I’ve put together for those of you interested in real estate crowdfunding. Once you’ve read all the articles, you’ll have more confidence making better real estate investment decisions.
The key to investing properly is to understand what you are investing in, determine your risk exposure, and invest according to your risk exposure.
I personally have roughly 35% of my net worth in real estate and real estate crowdfunding. Real estate is tangible, provides shelter, produces income, and is less volatile than stocks.
The real estate crowdfunding learning center is here to answer all your real estate-related questions.
Why Real Estate Crowdfunding
Learn How Real Estate Crowdfunding (Syndication) Works
Why Real Estate Crowdfunding Is An Attractive Investment
The Main Reasons To Invest In Commercial Real Estate (CRE)
Real Estate Crowdfunding Fundamentals
The Different Types Of Property Classes To Be Aware Of
The Difference Between Real Estate Crowdfunding And REITs
Tax Documents For Investing In Real Estate Crowdfunding
Real Estate Crowdfunding Investing
Real Estate Crowdfunding Investment Guidelines For Potentially Higher Returns
Equity Or Debt Investing? An Investment Allocation Guide
Why Multifamily Is An Attractive Investment
How Do Real Estate Crowdfunding Platforms Deal With Underperforming Assets
Real Estate Crowdfunding Risks To Be Aware Of
Real Estate Crowdfunding Trends
Focus On Trends: Why I’m Investing In The Heartland Of America
Buy Utility, Rent Luxury: The Real Estate Investing Rule To Follow
The Best Cities To Buy Real Estate Today (based on demographics)
The Best States To Buy Real Estate Today (valuations and tax rates)
How Is Real Estate Crowdfunding Getting Affected By The Pandemic?
Top Real Estate Crowdfunding Platform Reviews
It’s important to stick with the top real estate crowdfunding platforms. I’ve met with and researched the following three extensively:
The largest real estate crowdfunding platforms will garner the most amount of funding. They will also attract the best deals and have the strongest underwriting. As we saw with RealtyShares closing its doors, there is platform risk.
Most real estate crowdfunding companies investing in equity and preferred equity set up LLCs and operating companies for the specific purpose of managing our investments. Therefore, investments continue to perform regardless of what happens to the platform.
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 like all investments.
Utilize each platform to thoroughly analyze each deal and diversify your holdings so that you have at least five investments, if not 10+ investments. Building wealth is about investing for the long-term, and I believe real estate crowdfunding is here to stay.
With the 10-year bond yield and mortgage rates back down to all-time lows in 2020, a very supportive Federal Reserve and Federal government, and the shift in capital towards more stable assets, demand for real estate continues to remain strong.
The Best Real Estate Crowdfunding Platforms
CrowdStreet is unique in that investors on its platform invest directly with its vetted sponsors. I like how CrowdStreet is focused on 18-hour cities, secondary markets where valuations are lower and growth rates are potentially higher.
Fundrise is one of my favorite platforms because they are the creator of the eREIT. Investors, accredited and non-accredited, can invest as little as $500 on the Fundrise platform. Returns have been very steady over the years. An eREIT is a great way to diversify your real estate exposure in a less volatile way than stocks.
These two are the two best platforms on the market today with the strongest balance sheets and the most stringent vetting process. All are free to sign up and explore.
To get rich, you must identify long-term trends and invest. Thanks to technology, real estate crowdfunding, and the rise of 1099 freelance work, I believe investing in the heartland is going to be a multi-decade trend that is going to make investors money.
Please bookmark this real estate crowdfunding learning center. It should come in handy as you come across new platforms and new investments to analyze.
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 35% 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 $260,000 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.
FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites today with over 1.5 million organic pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal.
