The Real Estate Crowdfunding Review March 2019 Update
Updated: Sep 20, 2023
New deep-dive reviews of asset-based lender YieldStreet and distressed debt AHP Servicing. The private club hits 2,000 members and $2.1 billion. Tons of club-only specials including 3 new reduced fund minimums, free qualified-purchaser / accredited-investor verification, free self-directed IRA pilot and 2 new club feeders. Plus the latest news.
(Usual disclaimer: I'm just an investor expressing my personal opinion and not a financial advisor, attorney or accountant. Consult your own financial professionals before making any financial decisions. Code of Ethics: We do not accept any money from any sponsor or platform for anything, including postings, reviews, referring investors, affiliate leads or advertising. Nor do we negotiate special terms for ourselves in the club above what we negotiate for the benefit of members.).
Deep-dive reviews
YieldStreet This platform offers asset-based lending investments with projected yields from 8-20%. They have the typical real estate/hard money loans, and also some difficult-to-find alternative-finance loan types like litigation finance and marine finance. Additionally it's one of the only platforms that pays interest on un-deployed cash, which is a nice plus. On the other hand, the platform has low volume, and the few deals that are available tend to fill up extraordinarily quickly (some are gone in minutes or seconds!). This can be exciting to some and a turnoff to others. Conservative investors who require thorough due diligence on every deal may conclude the platform is not worth the effort. Some investors claim that support is slow, due diligence materials are sparse/inadequate, and communication can be poor. Also the site deals do not have full protection if the platform goes into bankruptcy, which can put investor's money at risk. (Read more...)
AHP Servicing AHP Servicing offers both non-accredited and accredited investors a niche strategy: distressed-debt investments in single-family residential homes. It currently has a single fund available which offers investors access to a portfolio of these notes at a very low $100 minimum. The fund projects a 8-10% return which is paid monthly, and has no investor fees. On the other hand, the blackbox nature of the investment class makes it impossible to do a recession stress test before investing. This may be a showstopper for many conservative investors. Additionally they don't have full bankruptcy protection and the unusual profit split structure may cause concern for some. (Read more...)
Private Investor Club Updates
(Membership in the club is free, but requires verification that the investor has no ties to platforms or sponsors. New members can apply here.)
Club News
Club adds 2000th member: The club continues to grow very quickly. Despite screening out approximately 50% of candidates, it is now over 2000 members and over $2.1 billion in aggregate investable assets (up from $1.45 billion in October of last year). (Read more...)
New Club Specials
Reduced minimum investments:
An office and multifamily value-added/developer fund has reduced its minimum from $500k to $100k. (More...)
Free verification of qualified purchaser status (or accredited investor status): Why pay your accountant or attorney $35-$40 when you can do this for free? (More...)
Free self-directed IRA pilot program: Why pay hundreds of dollars a year? The club has an exclusive invitation to a pilot program for a completely free self-directed IRA. (More...) See all the club specials here.
Club-only Feeder Fund Updates
Feeders allow club members to access funds that significantly lower minimums than direct investment. They can also offer better diversification and simpler taxes.
Hard-money loan multi-fund feeder (taking soft-commits)
This is a multi-fund feeder-fund that invests in the 3 most popular hard money loan funds with the club. It lets an investor access these funds at a much lower minimum than a direct investment ($25k vs. $200k) and protects them from the current and future minimum hikes in progress at 2 of the funds. It also lets gives an investor a much more diversified investment (across geography, # of notes, borrower strategy and underwriting focus) than any single direct investment . And it greatly reduces the tax expense and headaches of multiple direct investments. (More...)
Grubb Properties Feeder fund (taking expressions of interest)
Diversified office and multifamily value-added and development fund in the SouthEast with unusual add-on strategy. Sponsor has multiple cycle experience with only 2 deals with lost principal.Target total return in the mid teens. (More...)
Want more? Here's a list of all of the other current club feeders. (More...)
News and Analysis
Self Storage rents down 1.7% nationally due to too much supply in certain markets. https://buff.ly/2TYmBO7
Oregon passes rent control. This doesn't look too bad to Oregon property owners to me. It "limits" yearly rent increases to a pretty generous 7% + CPI (with exemptions for new and smaller buildings), and some other misc. things that don't seem too onerous. https://buff.ly/2H4LEeZ
More signs of late cycle weakness? Consumers drive the vast majority of the US economy but US retail sales plunged in December (the most in 9 years). https://buff.ly/2BxMKft
Investors have been buying NYC properties anticipating the new Amazon HQ 2 being built there. On February 14th, Amazon announced HQ2 is being yanked from there and won’t happen. https://buff.ly/2IcHnIt
IRS clarifies the rules for the generous, new 20% deduction creating new winners and losers. https://buff.ly/2Sa5s7t
Did you know the creation of #RealEstateCrowdfunding was an accident? Read the story in #AdamGower 's new book, "Leaders of the Crowd" (I'm also featured and interviewed). https://buff.ly/2UsGI6Y A limited-time 50% off coupon code is: IPPPOLITO (As always: I get no compensation for referrals and/or purchases, and code is simply a courtesy to club members.)
