Why are we doing this again (investing in single MF properties)?
Here I sit, working a Master Lease Option on a 60-unit. It's a decent deal: $50,000 to hold it for 3 years. It's mismanaged and has upside. Needs a minimum of $300,000 to get it from a C to a B. In other words, I will plunk down $350,000, and I'll be able to turn it into a respectable property that I can own for years. I hope to earn a 10% CoC and plenty of equity upside. It's a good deal, but it involves plenty of risk and a lot of hard work.
Or I can take that money and put $50,000 into multiple deals through crowdfunding sites. I am already in the Fundrise income eREIT, which is paying 11%. I've put $50K each into two different mobile home park funds that will pay at least that and have equity upside. There are numerous multifamily deals listed on sites like RealtyMogul, RealtyShares, and Crowdstreet. RealtyMogul has its MogulREIT. Fundrise has 3 other REITS that combine equity and cash flow. Non-accredited investors can invest in the REIT products. Soon, there will be numerous sites using Title III crowdfunding which will allow non-accredited investors to invest a little in multiple deals; SmallChange.com is the first; there will be many more, including some state-based sites).
So, with crowdfunding, we can spread the risk around multiple properties and opportunities throughout the country. We can invest a little in commercial, multifamily, industrial, you name it. Each sponsor has far more experience than I do. Yes, the IRR's offered by these sponsors are in the 15-18% range vs. 20-25% that I project for my project. One has to pay a little for others to do all the work and to get a lower risk. Should be roughly same tax incentives either way.
So why should I invest a huge portion of my life savings into one property and do all the work myself instead of just taking the money and crowdfunding it? I would be curious if others are wondering the same thing. Why are we doing this?
Let me ask it another way: If you were an accredited investor looking to place money in real estate, why would you buy individual properties and do all the work yourself if you could place the money easily in multiple deals in multiple locations?
Thoughts?