All Forum Posts by: Joe Krug

What is disheartening is I used @Ian Ippolito 's website to do my diligence. I used three platforms and multiple loans to diversify. I had one through Fund that Flip that was essentially a complete loss of capital for a "verified repeat borrower". I currently have two on Patch of Land that have defaulted >90 days ago (i.e. before Covid) from their repeat borrowers, and the best I can get from PoL is 'we are trying and you may or may not get any money back' to paraphrase. RealtyShares was working well until Covid and then my last investment there went in to default. I did have 5/9 loans pay off completely, but the loss of principle is not worth the 8-12% that I made on the performing loans. 

Time to visit the sidelines and steer clear of these platforms. Honestly, I previously owned 5 turn key properties and they were far less headache. May be time to re-visit in 3-9 months as the hype over the virus dissipates. 

I am a physician. For years, I owned and self-managed or had a property manager for up to 5 SFR at a time. After a divorce, I sold all 5 properties and made money (1 was basically break-even). However, managing was time consuming. After doing what I thought was diligence, I decided to use several crowd sourced RE investment vehicles. I invested in 9 different investments across 3 different platforms.

So far....3 closed investments with complete return of principle making 9-12% annualized but taxed at short-term capital gains rates. 1 default with a 64% loss of principle (on a borrower who was a "repeat borrower" on the platform). 1 equity investment that in 20+ months has paid less than 2% and currently is looking to re-finance (and this was on a borrower who had "3 prior investments" with this particular platform). 1 pending closure with full return of capital. 3 investments that are paying between 3-9% annualized. 

There seem to be many who tout the benefits of this "passive" means of investing. However, my experience has been awful. 2 of the 9 have basically ruined the other 7 investments. Even with diversification being "the only free lunch" (Thanks Cramer) I have lost money. In addition, I am taxed at the most unfriendly of rates. 

Did I miss something entirely about this asset class? Do people have a better way of doing this? When my monies come back, I am done with this as a class. I could see hard lending for periods of >12 months to get long-term capital gains rates, but this is ridiculous. 

I have used a lender that was recommended to me by Platinum Properties for my last two properties. It was such a quicker, easier experience than my local bank or Quicken. Very glad to have connected with them. Have not purchased a property, but do know one of their local property managers and he does a fine job.