Has anyone ever invested in a deal on RealtyShares? Am interested in hearing some of your opinions? Success stories, horror stories, pros and cons, etc.
I'm seeing some pretty good returns being advertised and am tempted to jump in. Seems very passive and low maintenance, which I like.
I invested in two debt deals. One paid off and one is still going. No issues with either one. All payments were on time and complete.
My only complaint with them is they pay the first payment later than their competitors. They pay the month after a full month of investment. Your first payment will be in late May if you buy March 9. I think all of the other platforms I am on pay the month after investment (partial month payment). It's not a big deal, but is an adverse difference.
Ditto Jim NC Ree's response.
Also, you can't bank on interest for a full term as an investment that you think is for a year could prepay after 3 or 4 months. Then you'd have to choose another, maybe at a lower rate of return, not to mention the downtime in between.
My investments on RS have been debt only.
I've done both. But primarily debt.
So far, it's the debt investments that are short lived.
The yields on the equity are expected to be higher.
I have invested in equity deals offered by some of their competitors so this is not a comment about RS specifically; make sure you do your own diligence before you invest, period. Each platform, whether RS, Real Crowd, Realty Mogul, Crowdstreet etc say they do deep dives on the sponsor track record, property, location etc etc. While this may be true to an extent, it's still buyer beware in reality so spend the time to gather what info you can about the specific investment whether equity or debt. Watch fees too; with RS and RM you are investing through an LLC entity tthey create to manage the investment and they get compensated for that of course let alone the sponsor (on equity deals) has to make $ in various ways too.
I have 2 equity deals with RS through my SDIRA. They are 3 & 5 year investments, little over a year into the oldest one, no issues so far. Looking to invest in Crowd Street next.
@Chris Falk why kind of fees do they charge specifically? Is there a page on their site that I can read about this?
yes their site tells you in the offering details what RS fees are and also the sponsor fees if applicable. Worst case email or call RS to ask.
In general the equity deals will be better returns then debt given the higher risks.
RS has two different equity deal types:
- pref equity
Pref equity usually has higher annualized returns but once that is met you don't get to participate in any upside.
For equity there's a preferred rate but it's lower then what you'll see in a pref equity deal but after you pass the pref rate you still get to participate in any upside.
This is detailed in the waterfall under the financial tab.
RealtyShares does charge a fee to manage the funds so you will find higher returns on direct sponsorship models platforms like CrowdStreet and RealCrowd. But on RealtyShares let's you partipate at $5k and $10k levels for CS and RC it's usually $25k starting but lately like on RC it's been $50k and $100k on deals with 7-10yrs hold!!!
So the high returns often come with a catch!
Oh as horror stories goes, I had a deal in RS that was getting into trouble (a sponsor wasn't able to start repayments as scheduled this was due to getting the proper permits to start construction). To RS credit they setup a special webinar for all investors and had the sponsor on the call to explain the situation and what steps they were doing to put the project back on track. In the end the permits came through and they were able to execute on the deal and got my projected return back. But it goes to show you this definitely NOT risk free.
If you are going to play you really want to diversify your risk, either by doing a dozen or so deals and/or partipacting in a fund which gives you exposure to several properties.
I'm going into my third year doing this and been pleased, that being said i only has maybe 2 exits and the rest is still in progress but I am getting my monthly/quarterly checks so that's nice!
Also find some sponsors are too optimistic on their pro-forma so the real money I get is a little lower then they projected it's like 9% vs the 10.5% they projected but it changes widely where the last quarter they did much better and best the projection so just another thing to watch out for when doing equity.... your ACTUAL returns will vary ;).