New Platform Deep-Dive Review: Swell (from Aloha Capital)

This newish site claims an impressive $650 million AUM, 10% historical cash on cash return and a surprisingly large variety of loans to choose from. It's also open to nonaccredited investors and has a reasonably low $25k minimum. Downsides include apparent lack of disclosure of key details including co-investment and the fees and/or promotes charged. And key features don't appear to be fully explained like note type, capital stack position and whether notes are fully secured or not.

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A Changing of the Guard for Real Estate CrowdFunding?

The recent downturn has caused a lot of pain and disruption to the older crowdfunding sites (as discussed in previous reviews). And it's also caused a ton of new companies to popup (like daisies after a spring rain). And unsurprisingly, many of these new firms are taking a different approach than the old guard did.

So this is the sixth article in a new series about these fresh platforms. And this one is about Swell which specializes in real-estate debt Investments

What is Swell?

Swell is a newish real estate crowdfunding platform focused on residential and commercial real estate loans, and managed by Aloha Capital. The platform claims an impressive $650 million in assets under management (AUM), 233 investors and notable average cash-on-cash return of 10%.

It also currently has an impressive number of open investments: 10 loans. These range from 12% - 20% and include bridge loans, new construction and fix-and flip. The vast majority of current offerings are single family, and one is office.

Additionally Swell accepts all investors ...so you don't have to be accredited. Minimums are high for a non-accredited offering (but still low by accredited standards) at $25,000. 

And it's nice that they send checks so frequently (monthly instead of the usual quarterly).

On the other hand, many full cycle deals are showing negative MOIC or negative IRR. I almost wonder if this is a mistake (and asked them about this and am waiting to hear back). If not, then this is potentially a major red-flag,

Swell does not have full real-estate cycle experience with little to no money lost (which some conservative investors require). 

And in my opinion the pitch page is inadequate.  It does not appear to adequately disclose basic information necessary for an investor to understand the risks. This includes the full capital stack, exactly what the 3 types of passive notes are, the exact amount of co-investment Aloha is making, all fees and promotes and exactly what the investor will own (and if it's a secured loan or not).

Get more Info (including a due-diligence deep-dive)

This new review has more info on how Swell works, its pros and cons and also a due-diligence deep-dive as well. Click here to see the full Swell review.