Real Estate Crowdfunding: 2018 target $5,000 passive income
Here is a new way to invest in real estate if you don’t want to be a hands-on landlord. I started investing in real estate crowdfunding with RealtyShares in 2017. My experience has been positive so far and my goal is to increase our investment to $100,000 this year. You can read more about how I got started with real estate crowdfunding here. There are also more details there about what type of investments you can make in real estate crowdfunding: debt, preferred equity, and joint venture equity.
At the end of 2017, we had $28,000 invested with RealtyShares so it will be tough to reach $100,000 this year. We can do it if we sell our rental properties, but I don’t think it’s going to work this year. I found a new tenant so our condo will be occupied until 2019, at least. I’ll just have to add money opportunistically. I doubt think we’ll reach $100,000 this year so this goal will be a multi-year effort.
You can see all of our passive income over on the Passive Income page. I will update these passive income pages monthly.
2018 YTD real estate crowdfunding income
August was our best month so far. RealtyShares created $552 for us. All the projects paid out in the same month. It’d be great to see this level of payout every month. However, most of the projects don’t pay out every month. Next month, our real estate crowdfunding income will drop a ton. Anyway, I’m enjoying the warm feeling from the extra passive income. I’ll deal with next month later.
- 2017 real estate crowdfunding income: $437
- 2018 YTD real estate crowdfunding income: $1,585
Real estate projects I invested in
- A strip mall in Arizona ($8,000.) This was an equity investment. The estimated cash on cash return is 7% per year. After 3 years, the property will be sold and should generate about 10% (per annum) more. Payments have been on time so far.
- A fast food restaurant in Florida ($5,000, 1 year holding.) This one is a senior debt loan and the payments have been on time. The interest rate is a flat 9.5% per year. This deal was extended for 6 more months.
- An apartment in Texas ($5,000.) This equity deal is going well so far and the first payment came through in January. The estimated cash on cash return is 10% per year. After 3 years, the property will be sold and should generate about 6% (per annum) more.
- An apartment in Arizona ($10,000.) This equity deal just started paying out. It’s looking good so far. The estimated cash on cash return is 10% per year. After 5 years, the property will be sold and should generate about 6% (per annum) more.
- An apartment in North Carolina ($10,000.) This equity deal also just started paying out. The estimated cash on cash return is 8% per year. After 4 years, the property will be sold and should generate about 9% (per annum) more.
- Student housing near the University of Missouri ($12,000.) This is a longer-term project and my investment will be tied up for 5 years. University housing is supposed to be resilient in a recession so I’m hopeful that it will turn out well. I’ll add more info here once the project is funded. (I’m not supposed to share details until then. You can read more about the project yourself at RealtyShares.)
All our investments are doing well so far. This is the early stage of all these projects and we haven’t seen any problem yet. I hope to generate at least 10% ROI annually from RealtyShares. The equity deals return a portion of the profit quarterly and we’ll receive the rest of the profit when the project sells at the end of the term. We’ll have to wait until each project finished to calculate the total ROI.
*Estimated ROI is just that, an estimate. There are risks with any investments including real estate. If you’re not comfortable with real estate crowdfunding, I recommend REITs. They are more established and also has good returns. We have some REITs in our dividend portfolio. I like investing in real estate more directly and the local market is getting too expensive for us. My plan is to sell our local rentals and invest more in real estate crowdfunding and stocks. I may look into local rentals again if the market drops.
Sign up with RealtyShares
RealtyShares has been excellent so far, but we need to stay invested to see if the income can be sustained over the long haul. One bad project can really derail our total ROI. I’ll have to be careful and pick the projects with good management.
You can sign up with RealtyShares to browse the various projects and see if real estate crowdfunding is a good match for you.
Disclosure: We may receive a referral fee if you sign up for a service through a link on this page. The content contains testimonials from Joe. The actual experience of other customers may differ from the testimonials. The testimonials do not represent guarantees of future performance or success. Moreover, no person nor any other entity assumes responsibility for the accuracy and completeness of the testimonials.
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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