Is real estate crowdfunding worth while??

2 Replies

I have recently become interested in real estate crowdfunding sites like FUNDRISE and PATCHOFLAND. After doing some research on these sites it seems they differentiate themselves from typical stock investments by promising slightly higher returns. 10% compared to 8% or so... I am looking for any reviews..? I'm wondering if real estate crowdfunding is becoming more popular? The sites made it seem like a relatively risk free, solid investment. Thanks, Isaac

@Isaac Bliek , I've interviewed hundreds of investors on all the crowdfunding sites such as the ones you've mentioned. 

1) Patch of Land was at one time one of the investor favorites, but currently is one of the most complained about sites. Biggest complaints about uncured default/foreclosures. Unlike competitors, they don't release their track record to the general public, but the anecdotal information from investors seems to show that it is many times higher than best-of-breed competitors. Whatever the actual uncured default rate is, the lack of transparency, to me, is a yellow flag. Platforms with full transparency and low uncured default rates are: Peerstreet, Fundthatflip, etc.. There are also several funds that accredited investors can invest in with low uncured default rates.

2) Fundrise has several options, which might be good choices for nonaccredited investors. But if you are considering patch of land, then I am guessing you are accredited? If so, in general you can find funds with much lower fees, much higher investment by principals, and much longer track records.

3) A pretty reliable rule of thumb is that whenever an investment gives you a higher return, it's because it's taking higher risk. That are definitely not risk-free investments.

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