Use Caution With Real Estate Crowdfunding
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 14 November 2018
⏱️ 36 minutes
🧾️ Download transcript
Summary
#230 With RealtyShares and other crowdfunding platforms shutting down, should you invest on these platforms and if so how do you go about evaluating the investment opportunities. Thanks to Policy Genius for sponsoring the episode.
For show notes and more information on this episode click here.
- [0:30] Check out this episode for David’s experience with real estate crowdfunding investments
- [2:35] Real estate crowdfunding platforms are comprised of this type of structure
- [6:57] You want to understand these considerations before making an investment
- [12:40] Issues began to crop up with David’s investment – learn from his story
- [18:41] David’s experience with these platforms have not led to a lot of transparency
- [25:07] There’s not a specific way to determine which real estate crowdfunding platforms are going to survive
- [30:08] Public and private REITs are another great investment option to consider
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Transcript
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| 0:00.0 | Welcome to Money for the rest of us. This is a personal finance show on money. How it works, how to invest it, how to live without worrying about it. |
| 0:09.0 | I'm your host, David Stein. Today is episode 230. It's titled Use Caution with Real Estate Crowdfunding. |
| 0:18.8 | Back in May 2016 I released an episode, Tidal's episode 106, Investing in Real Estate on Crowdfunding Platform. |
| 0:29.2 | I had just made my first Real Estate Crowdfunding Investment. This was a big |
| 0:35.0 | I don't know if this was peak real estate crowdfunding but there was a lot of interest |
| 0:40.0 | there were well over a hundred platforms most of which were backed by venture capitalists |
| 0:47.2 | so they were early-stage companies it was hard to figure out who the leaders were and |
| 0:51.3 | where to invest. |
| 0:53.3 | But I chose to make a $20,000 investment on a choir real estate. |
| 1:01.6 | And I thought it would be interesting. it's been two and a half years, to sort of share |
| 1:07.2 | with you what has happened since then. How has that investment worked out? What have I learned? What did the pitfalls have been? |
| 1:16.0 | Going in things always look really rosy? Didn't work out as well as I would have liked |
| 1:24.5 | The investment was a hotel and restaurant. |
| 1:29.2 | And I signed a confidentiality agreement when I made the investment, so I'm not going to give the name |
| 1:34.9 | I'm going to share sort of broad characteristics. What was I looking for and as we go through |
| 1:40.8 | the process you'll you'll be able to take away what you should look for if you're |
| 1:46.4 | considering making an investment via a crowdfunding real estate platform or for any type of investment. |
| 1:54.4 | I've invested institutionally in real estate investment, so I'm comfortable looking |
| 2:00.4 | at the structures of limited partnerships, |
| 2:05.0 | looking at how the particular investment process. |
| 2:07.3 | So in looking at this particular opportunity |
| 2:10.8 | on acquire real estate, I approached it in the same way. And the first |
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