I put 2 million into 20 crowd fund deals. Posting performance:

166 Replies

Here are the 20 deals I recently funded in a google spreadsheet. I will update performance monthly. I just have to figure out a few more formulas and I will add performance metrics:

https://docs.google.com/spreadsheets/d/1dHzmfM1l-BWSaH-yaLP1TL70lSvB8StSmeesQOBB4MU/edit?usp=sharing

I promise its Legit :)

If anyone is sharp with spreadsheets I would love to determine the best formula to find the blended/weighted average interest rate of the portfolio for each company. 

Short story is I sold my company last year. I need to invest or I will be living off the principal and will spend through it. Im nervous about sticking it in the stock/bond market. I have flipped about 40 houses since I was 20, (Im 50 now) so I feel much more comfortable in this market. I just moved to Hawaii, and completed my first fix/flip last month and just bought another. 

My theory is that rather than average 8% in the market over time and potentially suffer from a market decline, I feel that these investments have the following advantages:

1) I can cherry pick the properties and deals that I feel good about. 
2) I am funding them under appraised value.
3) Person borrowing has 10% to 50% of his/her own money in it. 
4) The person borrowing tends to have 750 to 830 credit in the ones I picked. 
5) Monies are dispersed judiciously as work is done (I hope)
6) We (company/investors) have first position on properties

If housing market declines or deals fail, I think I can work my way into buying out other investors and finishing the property myself or renting it out. Thats the theory anyway.

Hope I am right (or lucky)... I don't think any wise investment pro would suggest putting all your eggs in the Realestate basket... so don't take this as a suggestion. 

I will keep these up to date and share all my thrills of victory or my agonies of defeat.

@Matthew R. , I notice most of your investments are through PoL... That was one of the companies I was looking into for lending possibilities for my future flips, though I've never utilized crowd-funding before. I'm curious, was there a specific reason you chose to use PoL for a majority of your investments?

@Matthew R.   good luck with it your certainly well diversified.. Any reason you did not try Realty Mogul they are a top shelf player as well.

Hi Shannon,

I think it was a combination of a few impressions I had. Understand that these are just "impressions" as I have not done deep dives on all the companies. (Forgive me, I seem to be a fan of bullets)

1) They seemed to focus on the residential stuff I like with a good range of low to high end.
2) They prefund everything which lends a bit of confidence that they have done diligence.
3) The staff was very accessible. Guys like Randy and Jason pick right up whenever I call.
4) Their judgement on quality of deals seemed reasonably aligned with mine. 
5) They had brought in enough VC money and Institutional money that they seem solid.
6) The risk ratings and related information they provide seem very transparent and helpful and factor personal investment the sponsor has in the deal, credit rating, appraisal, LTV, (loan to value) ARV, (after renovation value), number of prior successful deals, commentary on the area trends, etc.
7) They had enough prior deals that I felt comfortable... whereas companies like iFunding had less track record, but I was not competing with a huge number of investors like Realty Shares.
8) Maybe more than anything, I just happened to like the offerings they happened to have when I was looking. 
9) The returns seemed higher relative to risk. I think the returns most of these guys offer range from 8% to 16%, and this rate is supposedly correlated to the associated risk. When I compared risk, I felt I was able to average 11+% with low risk... I am not excited about shooting for highest interest... I want a good balance.

This is NOT a very valid endorsement however, as I did not do enough diligence on all the companies to provide a meaningful comparison... although I have considered doing something like that.  

ps.. Is it obvious I sold my biz? I think I have too much time on my hands...

Hi Jay, 

I will look at Realty Mogul a bit more... I am happy to give em a try if the right deal is there. 

Updated almost 4 years ago

I might be reading it wrong, but I only see three completed deals on RM

@Matthew R. Aloha Matthew. It sounds like you're a mix of passive/active investor, lending while still doing your own flips. Most of the deals I do in Hawaii are funded directly by private lenders, though I've used a HML on a few this pat year (Oahu). For the few Hawaii investors I know who also do both, they're lending directly instead of through an intermediary HML. As you do more local flips, you might get comfortable enough to fund directly and work out better terms for both you and your borrower, perhaps?

Hi Micheal, 

Good point. I have done this in the past and would be happy to consider them in the future. I just don't have any connections to the direct market other than maybe advertising somewhere... 

I would try to use similar criteria, and look for some personal investment, appraisal/inspection, good LTV, a solid plan, first position, etc..

I tend to move pretty fast if something looks reasonably good. 

matt

Thanks for sharing your spreadsheet and starting this discussion, Matthew!

Always interested in seeing how others track their investments.

I just started tracking my investments and created an example Google spreadsheet similar to what I use.

https://docs.google.com/spreadsheets/d/1X0f16KOXPc...

Few bullet points of my own:

  • I like to split investments per platform.  Each platform gets their own worksheet (tab) within the doc.
  • I wanted to get XIRR calculations rather than just a simple ROI. The problem with this is that in the early stages of an investment, you won't have enough data for an XIRR calculation. I got around this by testing the XIRR for errors and running an ROI calc when it errors out. It tells you which calculation it uses. If you supply enough data for an XIRR, it'll switch to use XIRR.
  • I don't like the fact that in the early stages of an investment, the ROI or XIRR spits out a high negative value. This hurts both sum and average. However technically valid those numbers are, it doesn't give a great sense of how the platforms compare to each other. It would be pretty trivial to add a "Completed" column and only have tallies target these columns. Maybe that would help?
  • The data in the spreadsheet is fake.  It's more to display the various states of an investment than anything else.  A completed debt deal, an equity deal that completed earlier than expected and two ongoing equity deals in various stages. 
  • Current limitation is five investments per platform.  You can easily add more, but it won't be as pretty.  :)
  • I locked the spreadsheet from editing since it's pretty easy to destroy the formulas.  Feel free to make a copy and test out functionality in your own copy.

Hope this helps someone and encourages more discussion!

Avi

@Matthew R. @Avi M.

Just some thoughts here. POL and RS are great services. They have a great business models where they take a couple of points for profit and cut out the marketing hassle for the operator and investor so they should be compensated for this.

However (this is coming from an Early Millennial) I think you can find much better returns by good old fashion face to face networking and telephone networking to find great lead investors. A lot of their syndications have much higher returns however you have to find them. They don't use POL or RS because they have word of mouth and they can pick and choose which investors to use (they can choose not to work with a whinny baby who invested their family's only $50K).

The main reason I'm not a fan of online crowdfunding is exactly why it makes everyone so excited - Its for everyone. Now you don't have that competitive advantage and picking up sub 12% returns with the rest of the masses. From the looks of your spreadsheet it seems like you have a sizeable fun money fund, why do you think Rotary Clubs/Country Clubs are made? I really suggest you step up to the big kids platform and quick playing in the sandbox of the unsophisticated investors who do not want to network and invest from their laptop at home.

I talk more about this in my blog article on the theory of "Why the View is Best at the Top".

Originally posted by @Lane Kawaoka :

@Matthew R. @Avi M.

Just some thoughts here. POL and RS are great services. They have a great business models where they take a couple of points for profit and cut out the marketing hassle for the operator and investor so they should be compensated for this.

However (this is coming from an Early Millennial) I think you can find much better returns by good old fashion face to face networking and telephone networking to find great lead investors. A lot of their syndications have much higher returns however you have to find them. They don't use POL or RS because they have word of mouth and they can pick and choose which investors to use (they can choose not to work with a whinny baby who invested their family's only $50K).

The main reason I'm not a fan of online crowdfunding is exactly why it makes everyone so excited - Its for everyone. Now you don't have that competitive advantage and picking up sub 12% returns with the rest of the masses. From the looks of your spreadsheet it seems like you have a sizeable fun money fund, why do you think Rotary Clubs/Country Clubs are made? I really suggest you step up to the big kids platform and quick playing in the sandbox of the unsophisticated investors who do not want to network and invest from their laptop at home.

I talk more about this in my blog article on the theory of "Why the View is Best at the Top".

 Well said, and exceptional blog post and link to Tim Ferris blog to reiterate the points. 

@Lane K.

The better operators certainly avoid the current business models from the platforms.  There are many people working on fixing this problem right now and tools will be coming out this year to give the better operators the tools they need to crowdfund on their own without the need for an intermediary.  So your assessment of the industry is correct for the time being, but these threads are evergreen and I expect for this to change as time wears on.  

Unfortunately FINRA will be a required intermediary for Title III Portals and thus non-accredited investors will be stuck in investments where the operator HAS to go through a marketplace to place their deal.  Thus they will be required to invest in projects with overhead fees, which will be from the riskiest operators and projects with the most overhead.  

Thanks Lane.

I will read your blog. I agree direct investment / hard money investment would be best for me... but given my current lack of opportunity and networking skills... might take me a bit. 

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