Has anyone used Realtyshares.com
Hi guys,
I'm relatively new to the world of real estate investing and I came across Realtyshares.com from the Bigger Pockets podcast and was interested in exploring it further. Has anyone invested with them? Any feedback, input or advice is really appreciated.
Thanking you in advance for any words of wisdom.
Minh.
Hi Minh,
RealtyShares is a crowdfunding platform that brings borrowers and investors (lenders) together similar to Lending Club. The difference is RealtyShares investors will buy notes/loans (i.e. debt securities) secured by real estate property; while the Lending Club investors buy notes without any collateral to secure the loans, which means if the borrower defaults on the loan, the investor has no way to get his money back. If you are interested in buying paper assets (i.e. stock, bond, debt securities, etc.), RealtyShares will be better choice than Lending Club in my opinion.
Linda
@Minh Ly RealyShares only allows investing from accredited investors right now. You can look up the exact definition but it roughly means you must have assets over $1M or an annual income of over $200k I think.
I have 1 investment with RealtyShares for about 2-3 months. It seems to be going along fine.
RealtyShares is probably my least favorite of the platform among several I've invested on for two reasons: (1) they do not prefund their investments and (2) a long lag time from closing to first payment.
Many platforms prefund their investments, meaning investors begin accruing interest the day they make the purchase, the day the platform receives their funds or shortly thereafter that date (ie. close to the actual purchase date). RealtyShares doesn't start accruing interest for investors until the deal with the borrower actually closes. That depends on RealtyShares' effectiveness in raising funds. Your investment is held hostage earning nothing in the meantime. I waited about 3 weeks for my investment and am watching some now that are open over 3 weeks and still waiting for funding.
RealtyShares pays around the end of the first full month of investment. This means that if your deal closed today (Aug 1), you would not get a payment until towards the end of September. That's not awful, but if you committed your funds in the beginning of July, that's 1 month of no interest (July) and another 6-8 week wait for your first payment. Many of the other platforms I am on outperform that.
Other than these reasons, RealtyShares tends to have more equity offerings at higher minimums than the other platforms I am on. They don't have many debt offerings. The debt offerings tend to be around 9%.
I would recommend RealtyShares; however, be sure to comparison shop as your IRR can suffer if you have to wait for the deal to close. I don't have any real insight into their underwriting effectiveness.
Jim.
There are a lot of pretenders in the very crowded real estate crowdfunding platform field. However, Realtyshares isn't one of them. They have one of the largest volumes of any of the sites. They also offer one of the most diverse mix of investment types of any site. Additionally they have low minimums from $1000-$5000 and superior bankruptcy protection.
Their fees are a tad bit on the high side ranging from 1% to 2%. And @James Mc Ree, did a great job of explaining the downside with them with no prefunding (versus other sites which don't have this problem).
If you're new to crowdfunding, I would recommend investigating all of the major players 1st to determine which of them match you best, before committing to 2 or 3 different platforms. If you have any questions just let me know.
@Minh Ly - I would recommend taking a look at @Ian Ippolito's website (link in the post above) . This is an excellent place to begin learning about CF RE investing in the US. Ian has done some incredible work rating the different platforms and clarifying the differences and nuances between them.
I am a non US resident like yourself and have found the crowdfunding RE space in the US a very effective investment avenue for me- Realty Shares is one of the platforms I use, but there are plenty others out there that you may want to look at as well - amongst them Patch of land, Fund that Flip, Acquire, Realty Mogul.
Thank you everyone for your points of view, it was all very helpful :-)
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quality company.... and for someone living in AU.. this is a great alternative to owning assets wholly.
@Saul L. Saul Question: I seem to remember seeing that foreigners were exempt from accreditation rules. At least as it pertains to 506 type offerings.. whats your take on it.
From my experience any investor needs to be accredited @Jay Hinrichs
Not only that- I think that most wont accept foreign investors directly and require a US based entity as the "investing entity".
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#2 All Forums Contributor
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@Saul L. must have to do with the withholding tax for interest income for foreigners they don't want to do that.. US entity they don't have to withhold.
Thank you :-)