Own Hearst's Mansion… For Less

By Matthew Milner, on Wednesday, September 21, 2016

A few years back, I sold a start-up I’d founded to Hearst, the media company that owns everything from Cosmopolitan Magazine to ESPN.

To pay my respects, I decided to visit the legendary Hearst Castle.

The Hearst Castle is a 90,000 square foot mansion on California’s coast, about halfway between San Francisco and Los Angeles.

It was built for William Randolph Hearst in 1919, and in its heyday in the 20s and 30s, it was the party spot for everyone from Cary Grant to Winston Churchill.

Among its extravagances, the Castle featured 61 bathrooms, an airfield, and the world's largest private zoo.

You’ve got to hand it to William Randolph: this guy knew how to live.

So when I learned that another of his mansions was for sale—and that I could buy a piece of it—I couldn’t wait to take a look.

The “Beverly House”

The other Hearst mansion I’m referring to is in Los Angeles, just a few blocks from the Beverly Hills Hotel. It’s called the “Beverly House.”

This place is a palace: at more than 50,000 square feet, it has a terrace big enough to seat 400 for dinner, cascading waterfalls, and an art deco nightclub.

It’s been featured in a number of movies, most notably in “The Bodyguard.” It’s the house where Whitney Houston’s character falls in love with her bodyguard, played by Kevin Costner.

Romantic movies not your thing?

The Beverly House was also in “The Godfather.” This house is where a movie exec wakes up to find the bloodied head of a stallion next to him in bed.

Beyond its movie credits, Beverly House is where JFK spent his honeymoon with Jackie. And more recently, it’s hosted parties for Rihanna, and for Prince Albert of Monaco.

Here are a few pictures, with a young Hearst in the middle (compliments of eonline):

Hearst LA 3

Can you imagine being able to own a place like this for yourself?

Well, now you can. Let me show you how...

The Deal

OK, to be fair, you probably can’t own the entire place.

But if you’ve got deep enough pockets, at least you could own a piece of it.

You see, the house is being crowdfunded on a funding portal called StartEngine.

It’s raising $40 million, and investors will earn 5% annual interest, paid quarterly.

And if Beverly House eventually sells for more than $130 million (it will soon be listed for up to $200 million), you might earn more.

In the meantime, it rents for $600,000 per month.

But here’s the bad news: each investment unit is going for $125,000.

That’s certainly a steep minimum investment, but not to worry...

But Now For Some Smaller Tickets

At Crowdability, we typically write about Equity Crowdfunding

This is where you and other investors pool your capital together to invest in start-ups—and in exchange, you receive a stake in the business.

But my story today is about Real Estate Crowdfunding, where you pool your capital with other investors to back real estate projects.

Real Estate Crowdfunding has become a major industry:

In 2015, websites like RealtyMogul and Fundrise gathered about $2.5 billion from investors like you and placed it into real estate projects.

Financially, these opportunities can be more attractive than publicly-traded REITs, and they can be far less messy than investing in real estate directly.

Of critical importance, minimum investments are as low as $1,000, and cash yields (generally paid monthly or quarterly) range from 8% all the way to 15%.

Try getting yields like that at your bank.

Websites for Real Estate Crowdfunding

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.

Here is a small sample of these sites:

Residential Real Estate

One of the most popular sites for residential investments is Realty Mogul.

Since the projects listed are usually single or multi-family homes, investment minimums are relatively low, sometimes just a few thousand dollars.

Commercial Real Estate

If you’re looking to get involved in bigger projects, check out the commercial real estate funding platforms.

These platforms include RealCrowd, as well as Prodigy Network, which has already raised more than $300 million from thousands of investors like you.

Specialized Real Estate

Other platforms focus on more specialized investments.

For instance, Fund That Flip provides short-term financing to renovate and sell (i.e. “flip”) residential real estate.

AlphaFlow is like a private mutual fund for real estate: rather than visiting dozens of platforms and vetting hundreds of projects, you can write one check and let the fund manager do all the work. It targets 9% annual net returns.

As opposed to AlphaFlow, which is for “accredited” investors only (at least $1 million net worth, or $200k in income), a platform called Fundrise offers a private real estate fund for ALL investors…

The minimum investment is just $1,000, and its target annual return is 15%.

Build Your Own Mansion

So whether you’re interested in investing $1,000 into Fundrise’s offering…

Or $125,000 into Hearst’s palace…

Consider exploring real estate crowdfunding:

It can provide you with an easy way to add market-beating yields to your portfolio.

Please note: Crowdability has no relationship with any of the funding platforms mentioned in this article. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.


Best Regards,
Matthew Milner
Matthew Milner


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Tags: Real Estate Crowdfunding Realty Mogul

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