Last Saturday night, my wife—well, future wife—and I invited friends over for a dinner party.
If I’d been in charge, shopping would have taken hours…
I like to traverse our Manhattan neighborhood and gather my favorite items from a dozen different spots: Citarella for its Wild Stone crab claws, Zabar’s for its stinky French cheese, Magnolia Bakery for its Devil’s Food Cake, etc.
But that’s not my fiancée’s style. She just logged onto FreshDirect.com—and in ten minutes, she’d ordered everything we needed and scheduled a delivery.
Dinner at our place was a hit—but by this point, you might be wondering:
What could this story possibly have to do with earning a 15% yield?
The point is, my fiancée is more efficient than I am...
And as we’ve come to realize, our differences show up in our investing styles:
I’ll spend months ferreting out a private real estate investment that offers the exact terms I’m looking for—from geographic location, to debt level, to management fees.
Meanwhile, she’ll quickly invest in a publicly-traded REIT and be done with it.
Do I earn more than she does? Maybe—but it costs me hundreds of hours of work.
Recently, however, I came across a new investment option:
It’s helping me be more efficient…
It’s helping her get higher returns…
And it’s helping investors like you earn double-digit yields.
Crowdfunding for Real Estate
At Crowdability, we spend most of our time showing you how to invest in private start-ups so you can earn sizable capital gains.
But we also like to show you private opportunities where you can earn current income—for example, by investing in real estate deals like the one Wayne wrote about last week.
You see, on special funding portals that specialize in real estate, folks like you can get access to private real estate investment opportunities.
Financially, these opportunities can be more appealing than publicly-traded REITs (more on that later), and they can be far less messy than investing in real estate directly.
Minimum investments are as low as $1,000, and yields range from 10% to 15%.
All these benefits might help explain why private real estate investing has quickly turned into a massive industry:
In 2014, investors like you put about $1 billion into these high-yielders. Last year, that number jumped to an estimated $2.5 billion.
3 Easy Ways to Earn Double-Digit Yields
The thing is, just like I could spend hours visiting the specialty food shops in my neighborhood, I could spend weeks visiting specialty real estate portals.
In the U.S. alone, there are an estimated 80 to 100 sites that focus on real estate investments. Some focus on residential properties, others on commercial deals, and still others on quick “flips” or international opportunities.
So today, I’m going to show you three websites that can help make your investing more efficient, while also helping you maximize your returns:
AlphaFlow—AlphaFlow just launched the first “multi-platform fund” for real estate crowdfunding.
Think of it like a private mutual fund for real estate: rather than visiting dozens of funding platforms yourself and vetting hundreds of different real estate projects, you can write one check and then let the fund manager do all the work.
AlphaFlow invests in what it considers the best deals from top real estate platforms like RealtyMogul, Patch of Land and AssetAvenue. It offers you further diversification by investing across geographies and property types.
The fund is targeting 10% gross returns. With its 1% fee, your target net returns are 9%. You’d receive monthly cash distributions, and your principal would be returned as fund investments mature.
Compared to a publicly-traded REIT (Real Estate Investment Trust), those would be attractive returns:
Historically, public REITs have delivered 11.3% gross returns—but their upfront fees of 6% to 7% take a huge bite out of those numbers. And because they’re publicly-traded, they tend to get whiplashed by the gyrations of the market.
We like that AlphaFlow’s founders are investing their own money alongside yours…
Unfortunately, this fund is only open to “Accredited” investors (those with at least $200k in annual income, or $1 million in net worth), and it has a $25,000 minimum.
Fundrise—As opposed to AlphaFlow’s “Accredited only” fund, a platform called Fundrise is offering a private real estate fund for all investors.
This is a $50 million fund, and the minimum investment is just $1,000. The fund will primarily invest in cash flowing commercial real estate properties across the U.S.
Its target annual return is 15%, and cash distributions are paid quarterly.
Upfront costs are about 1%, and in what Fundrise calls a “new standard in accountability,” you won’t pay an ongoing 1% management fee until you earn your 15% annualized return.
Property.com—This website is an “aggregator.” It gathers real estate deals from many of the web’s top funding platforms, then puts them all in one place for your efficient review.
In other words, it’s like FreshDirect—but inside it, you can find the crab claws from Citeralla, and the cake from Magnolia. (It’s also similar to Crowdability, which aggregates the best start-up deals from all across the web.)
By using property.com, I can quickly select which projects to invest in based on my own criteria, and I don’t need to pay extra commissions to a fund manager.
Efficiency + Yield
Whether your character is more like mine, or more like my fiancée’s, the investment options I showed you today should make it easier and faster for you to earn double-digit yields in real estate.
The “fund” options from AlphaFlow and Fundrise offer you the most ease—and with their reasonable fee structures, they might deliver solid returns, too.
And for those looking for an easy way to search through real estate deals from across the web, check out property.com here »
Please note: Crowdability has no relationship with AlphaFlow, Fundrise or Property.com. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.