Real Estate Syndication Platforms: How to Find New Deal Opportunities
Real estate investment platforms have revolutionized the way people invest in property.
These online platforms allow investors to pool their money together and invest in a variety of real estate projects, from commercial buildings to residential properties. With low minimum investments and easy-to-use interfaces, these platforms have opened up real estate investing to a wider audience. In this article, we will explore the benefits and drawbacks of real estate investment platforms and how they can help you achieve your investment goals.
Where Should You Look for Real Estate Syndication Deals?
There are various places where you can look for real estate syndication deals. Some of the most common sources include online real estate investment platforms, local real estate investment groups and clubs, personal referrals from other investors or industry professionals, and networking events. Networking events are especially helpful, and some of them even take place online, so you can learn about deals that may be right for you from the comfort of your home.
Additionally, you can also reach out to real estate brokers or agents who specialize in commercial properties, as they may have access to off-market deals that are not publicly advertised. It's important to do your due diligence and research potential deals thoroughly before investing any money.
Real Estate Syndication Platforms
The purpose of this post though is to look more closely at some of the platforms that are out there and how they can help (or hurt) your real estate investment journey. While nothing is certain, these tools could help you with your passive income. Just be sure to do your research!!
Holdfolio is a platform that vets potential investors before giving them access to what they say are “exclusive family real estate investment opportunities” to help you generate passive income. At first glance, their site is clean and professional. They target their investments primarily in the Midwest and Southern United States, boast 8%-10% cash on cash returns, and highlight that they have a “reputable sponsor with an experienced track record.”
“An easier way to build a real estate portfolio, no landlord duties required,” Crowdstreet is one of the major players in the real estate crowdfunding industry. To get in on it, there is a minimum investment of at least $25,000 for the smallest deals, and you must be an accredited investor. The only downside (besides the normal risks) is that your money is stuck until all properties you invest in are fully realized. On the bright side, the website has great resources for learning about commercial real estate investments.
EquityMultiple is a real estate crowdfunding company that lets investors get in on deals starting with just $5,000. They offer a variety of deal types, so you can hedge your debts with high-yield, short-term investments or commit to investments focused on near-term income. There are low barriers to entry, but unfortunately, the service is only available to accredited investors.
Fundrise has a reported $7+ billion investment portfolio that aims to harness the most powerful long-term drivers of the U.S. economy. Based in Washington, D.C., you can bet these guys have some inside secrets about what could be happening in the near future in terms of investment direction. Their stated mission is to “empower the individual investor,” and they have some stellar reviews of providing investors with tangible results. Their minimum investment is just $10, and they don’t require you to be accredited. This is pure real estate crowdfunding.
PeerStreet is all about high-yield, short-term loans. Real estate borrowers take out loans and make monthly interest payments. As they make their payments, you, as an investor in that loan, receive monthly interest. As a real estate investment platform, PeerStreet facilitates all of the transactions – so all you have to do is invest. They were listed on the Deloitte Fast 500 – fastest growing technology companies in 2021, but since then, we haven’t seen much innovation. However, their two-sided market concept is something to think about. Keeping money moving is ultimately good for everyone involved.
RealtyMogul operates in the commercial real estate industry and has been described by The Wall Street Journal as an option that “lets investors browse, conduct due diligence, invest and track the performance of their investments through an online dashboard.” The brainchild of founder Jilliene Helman, RealtyMogul, is based on three concepts she identified while working in wealth management: the wealthiest clients invested in real estate, income was not related to time spent working, and passive cash flow was king. She developed the RealtyMogul platform to help members build their wealth, specifically through commercial real estate.
Understanding Real Estate Crowdfunding
The core concepts of real estate crowdfunding include pooling funds from multiple investors to finance a real estate project, using online platforms to manage the investment process, and offering investors the opportunity to invest in various real estate projects with low minimum investments. Real estate crowdfunding also allows for greater transparency and accessibility in the investment process, as investors can easily access information about potential deals and track their investments through online portals. Additionally, many real estate crowdfunding platforms offer different types of investment structures, such as debt or equity investments, allowing investors to choose the option that best fits their investment goals and risk tolerance.
As with any investment, there are risks associated with real estate crowdfunding. One of the main risks is the potential for loss of capital, as real estate investments can be subject to fluctuations in property values and rental income. Additionally, real estate crowdfunding is a relatively new industry and lacks the long-term track record of more traditional forms of real estate investing. This means that there may be less information available about the performance and risk factors of specific deals or platforms.
Other potential risks include changes in regulations or tax laws, lack of liquidity, and limited control over the management of the underlying properties. It's important for investors to carefully evaluate their investment goals and risk tolerance before investing in any real estate crowdfunding opportunities and to thoroughly research potential deals and platforms before committing any funds.
Related Content: Real Estate Syndication 101 - The Basics Revealed
How is Real Estate Crowdfunding Different From Syndication?
Real estate crowdfunding and real estate syndication are similar in that they both involve pooling together funds from multiple investors to finance a real estate project. However, there are some key differences between the two.
Real estate syndication typically involves a single sponsor or lead investor who sources the deal, manages the investment process, and negotiates the terms of the investment with other investors. In contrast, real estate crowdfunding platforms act as intermediaries between investors and sponsors, providing a platform for sponsors to showcase their deals to potential investors and managing the investment process on behalf of all parties involved.
Another difference is that real estate syndications typically require larger minimum investments and may be limited to accredited investors (those who meet certain income or net worth thresholds), while real estate crowdfunding allows for smaller minimum investments and is generally open to a wider pool of investors.
Overall, both real estate crowdfunding and real estate syndication can be effective ways for investors to participate in real estate investing alongside experienced syndication sponsors, but they differ in their approach and target audience.
This blog post is intended to provide general information and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship with Premier Law Group.