About The Real Estate Crowdfunding Review
Hi, my name is Ian Ippolito and I'm the founder and editor of The Real Estate Crowdfunding Review. I created the site in 2015 after being overwhelmed by people asking me for the due diligence I'd done for myself on the top platforms.
By August 2019, the site had 12,000+ viewers per month and 1,500+ email subscribers. There were also 3,000+ members in the private investor club (with over $4.6 billion in investable assets).
How much does the site cost to use?
The site is free of charge to all users. Membership in the private investor club is also free.
If it's free then how impartial is it?
Most free sites (and investor clubs), have significant financial conflicts of interest that compromise their neutrality, trustworthiness, ethics and usefulness. And lots of sponsors and platforms have tried to give me money for everything from referring investors of them, to talking about them, to letting them post slanted opinion pieces, to advertising. But I've turned them all down.
We legally bind ourselves to a code of ethics so we cannot accept money from any investment sponsor/platform for anything including guides, tutorials, reviews/postings, introducing or connecting investors, users who click on links that go to their sites, or for advertising them on the site. Additionally, some organizers of other investor clubs use them to negotiate special terms that members don't enjoy. We don't.
How can you decline sponsor and platform compensation like that, when others can't?
I'm a retired serial-entrepreneur, who started this because I wanted a hobby that's a lot more interesting than golf. I don't have a bunch of VCs or angel investors breathing down my neck to monetize the audience in a short-term way that destroys the site's integrity and reputation. And if the site shuts down tomorrow, I would be very disappointed...but I wouldn't exactly be eating Ramen noodles for the rest of my life. So this site is run a little differently.
Why do you put all that time into something that's free?
I get back 100+ times what I put in:
The aggregate spending power of the club has allowed me to negotiate millions of $ in special deals from sponsors. This has let me profit from my investments much more than I ever could have on my own.
Sponsors are much more willing to put up with my incredibly long and detailed due diligence process than when I was just a mere individual investor.
I have access to so much more deal flow than I did on my own. And club members have saved me from making all sorts of expensive mistakes.
Through my soapbox on this site, I have access to some of the greatest minds in investing (who would not be giving me the time of day otherwise).
The satisfaction of giving back and helping others is incalculable.
Also, for clarity: I can receive monetary compensation in 2 ways: donations from members and for managing feeders that club members request. (See the next section: "I want to support the site. How can I do it?")
I want to support the site. How can I do it?
If you feel the site has provided you with value and would like to make a donation, then it's greatly appreciated. (Click here to contact me about this.)
If you feel you got $200 worth of value and donate that, I'll also send a "thank-you" gift of a free copy of my deep-dive due-diligence library of all the investments in my portfolio. Each document took many man-weeks of exhaustive effort to compile and include extensive low-level interviews of the sponsors, my recession stress tests and more. (It also includes investments that didn't quite fit the bill for me, but might for someone else). Click here for more info.
And if a club feeder already meets your investment objectives, then your participation there is appreciated as well. I take a fee as a manager (and keep the excess beyond expenses). Typically I front the considerable costs necessary to launch these (to save members from having to pay an upfront fee), and receive compensation for the risk, as well as the considerable effort to put it together and keep it running smoothly. More info is on the individual feeder fund.
How did the site start?
When I first read about this new type of investing, I realized it was just what I was looking for. But I also discovered it was really hard to deploy my money.
I was expecting to see hundreds or thousands of investments on a single site (like peer to peer investing for consumer loan crowdfunding). But instead, no site had more than one or two. So I started looking at multiple sites, and quickly realized there was a huge variety. Some looked great, and others looked very suspicious.
So my assistant and I spent hours asking site reps, principals and support staff tough questions, and poring through legal contracts. And then we interviewed other investors to see what had happened to them. When we were done done, the word got around that I had created this list and more and more people asked for it. After I got tired of emailing it to people, I decide to put online, and then it grew from there (adding my portfolio, news, updates, etc).
(BTW, if you're interested in what's in my portfolio right now, here's the latest info).
How did the Private Investor Club start?
The public site is great, but isn't the ideal place to discuss certain things. I wanted to have a private place for investors to be able to source off-market deals, share due diligence, and negotiate discounts. I had seen others do this, but wasn't comfortable with the questionable conflicts of interest, unhelpful biased conversations, unfriendly environments, loud opinions from investors with very aggressive risk tolerances, etc.
So the private club was born. Membership is free but all applicants are aggressively screened for conflicts of interest and other issues. To provide a safe place for honest discussion as well as to protect confidential information provided exclusively to the club, all members agree to a tight nondisclosure agreement. Additionally, club numbers have funded a legal defense fund dedicated exclusively to litigating and enforcing the NDA on anyone who might otherwise be tempted to break it.
As mentioned above, the club has grown very rapidly. In 2019, it was growing so quickly that I was no longer able to keep up with screening new applicants. That's when my wife, Elise Ippolito, stepped in to be the full-time gatekeeper. Her thorough screening, has been essential in preserving the integrity of the club, and keeping it true to its original roots.
About Ian Ippolito
I live in sunny Tampa, Florida, and have an amazing wife and wonderful little boy. In my other life, I'm a serial tech entrepreneur. If you want, you can read more about that at https://en.wikipedia.org/wiki/Ian_Ippolito.
Learning the ropes:
I've always loved investing. In college, I spent many hours "not studying", and instead gobbling up everything I could find on stocks, bonds and (what was then) the amazing new innovation of mutual funds.
When I finally got a job, and a little money, I started investing for real for the first time. My goal is to become a millionaire by 65, so I eagerly saved 20% for my portfolio. I also remember the disappointment I felt when I had to read my nest egg, to afford a down payment on a townhouse. I wondered if I would ever make my goal, and for a several years it seemed that I wouldn't.
During that time, I created several businesses. Some more complete failures, but others did well enough to put me back on track. And then eventually I was doing better than "just on track". Things continue to go well, and at some point, the grand total got big enough to scare me. A little or bell went off in my head that told me I needed to consult with a professional, rather than trying to manage on my own. So I hired a wealth manager from a well-known, and respected firm.
A broker is "someone who's broker than you":
She spent a long time interviewing me and going over my portfolio, and at the end she concluded that it was completely inappropriate for someone of my age. This was 2008, and although the stock market was roaring, I told her I was concerned about how crazy home prices were getting. She explained I needed to look at the bigger picture. Modern Portfolio Theory objectively proved I was losing buckets of money by not being invested 70% / 30% in stocks and bonds. All her other clients couldn't rake in the money fast enough, and she'd help me do the same thing. Everyday as the Dow set new records, I really, really considered it. But thankfully I didn't pull the trigger.
Two months later (September 8, 2008), the Dow experienced it's worst point drop in history. It was the start of the Great Recession and years of mass unemployment and corporate failures. Many of her clients were forced to liquidate during those dark days and took catastrophic losses to their net worth and lifestyles. The fortunate ones were at least able to claw their way back to even after many years. But at that point, she wasn't even around. A few years into the recession, she decided wealth management wasn't her passion, and left for a completely different profession in a different city!
I was pretty shaken by my close call. I thought that perhaps I had just chosen the wrong advisor, so I tried again. But over time, the story repeated itself over. One time it was an advisor who didn't listen properly and liquidated an entire portfolio prematurely. Other times, it was advice that sounded good and was probably well-meaning, but also very wrong.
Eventually I wised up. I no longer believe there is an Oracle out there who has all the answers. I'm also extremely skeptical of anyone who tells me that they have some secret method of consistently outperforming the market. (My stock portfolio is predominately low-cost index funds). I now regularly question the assumptions of every self-proclaimed expert, and educate myself as much as possible. I might not make every decision perfectly, but at least I know that my interests are always perfectly aligned with myself.
Discovering crowd investing. Wow!
So my investment philosophy has led me to some untraditional areas of the financial world. In 2011, I ran into an awesome site. It was called the Lending Club, and it disintermediatied banks and let me make loans directly to consumers. Being a bank was really profitable. Over the next four years, my investment there would return a generous 7-9% annually.
(2017-08-25: in more recent years, the return has dropped to about 5% and I've found better risk-adjusted alternatives. So I have sold off and no longer invest in Lending Club. But it was a great run while it lasted and I still appreciate the genius of the idea.)
The genius of the idea (which came to be known as crowd investing or crowdfunding), was that the Lendingclub let me diversify my investment by allowing hundreds of other investors to share in financing that same loan. I couldn't possibly make consumer loans directly to people, because there's a high risk of losing my entire investment. But on Lending Club, I only invest $25 per loan, and my investment spread over thousands of consumers, rather than just one. The diversification means that the odds of losing money are infinitesimally smaller. In fact, Lending Club, says that no person with 200 notes has ever lost money in the history of the site
Yet, many financial advisors and wealth managers warned their clients to stay far clear of this entire industry. They argued that the entire concept was really radical and untested. It only started a few years ago, and there's not enough history to predict future performance.
I think it's good to be skeptical, and not rush into things prematurely. At the same time, a lot of the advice seemed more motivated by the desire to keep clients in investment areas where advisers could charge fees. The idea of loaning to consumers has existed hundreds of years, and been particularly honed for several decades by the credit card companies. And the whole argument of "not having enough history", is actually really silly. We have over 200 years of stock market history, and <.0001% of financial advisers predicted the stock market, real estate and private equity crash of the Great Recession. Perhaps these advisers want to wait 300 years, before recommending crowdfunding?
Anyway, I was glad to see that other investors voted their opinion with their dollars and made billions of dollars of loans on the Lendingclub. It went on to IPO in 2015, and had a market cap of $6.9 billion. Congratulations to everyone involved, for a job extremely well done.
In my opinion, the future of real estate crowdfunding, is not only just as bright, but 45 times brighter. That's because the size of the real estate industry itself is 45 times bigger than unsecured consumer loans. The industry does have its challenges: not enough investments, minimums that are too high, too many sites that don't protect investors, etc.. But that's to be expected from such a young industry. I think in 6-7 years, those problems will be in the past, and the industry will be making seismic waves in the financial industry.