Did you know that you can invest in real estate without physically having anything to do with the property? Such is the power of real estate investing companies. These companies equip you to hold a stake in real estate without worrying about issues such as maintenance or handling tenants. By taking the administration and landlord issues off your shoulders, real estate investment companies set you up to make passive income without worrying about the nitty-gritty.
Table of contents [Hide]
List of Companies to Invest in Real Estate
There is a wide slate of real estate companies from which to choose. Not every company offers the same type of investments however. Investors have the option to use a private REIT, a crowdfunding platform or a real estate market place.
REITs are a simple and accessible way to invest in real estate without becoming a landlord or investing thousands of dollars at once. In most cases, buying REITs is just as easy as buying equities like stocks and bonds.
Diversyfund: The DiversyFund Growth REIT is a SEC-regulated REIT that builds wealth by investing in cash-flowing apartment buildings. The company’s focus is on long-term capital appreciation from the renovation and repositioning of these multi-family properties.
Streitwise: A REIT that specializes solely in commercial real estate and has a low entry investment requirement of $1,000. Based in Los Angeles, Streitwise was created in 2017 by three veteran real estate investors who were frustrated that there wasn’t a good option for unaccredited investors to get into the commercial real estate market. Streitwise focuses on investing in low-risk rental commercial real estate aimed at providing clients with consistent high-yield returns. The team invests in markets that are steadily growing and offer low-risk potential outcomes.
A growing trend in real estate is crowdfunding. The hands off benefits of Crowdfunding is similar to that of REITs, but offer a little bit more control over the investment. Both crowdfunding and REITs allow investors to direct money toward properties and see returns without needing to actively manage the property. The main difference is with crowdfunding, you can funnel your money directly into tangible real estate assets. With REITs you are investing money with the company who in turn goes and invests money in real estate. A few crowdfunding platforms include:
Fundrise: If you don’t have a ton of money to invest, Fundrise lets you pool your assets with others. Fundrise mainly deals with REITs, which are known on the platform as eREITs. There are also eFunds, money taken from a variety of individual investors for purchase and development purposes. If you’re looking for a greater range of choice amongst projects, you might opt for the Advanced or Premium membership level.
Cadre: Because of its relatively high fees and rigorously curated investment opportunities, Cadre may not be the platform for everyone. However, because of these up-front costs, Cadre can very thoroughly vet opportunities so that you can choose from the cream of the crop. Choose from 2 ways to invest: an individual real estate project with a minimum of $50,000 in past individual deals and the Cadre Managed Portfolio, giving you the chance to invest $100,000 in 10 separate properties.
Real Estate Investing Platforms
Real estate investing platforms are online market places where investors can find both commercial and residential properties and either buy the property or buy shares in it. The platform where you find the properties will usually take care of the physical management of that property, still making it less of a hassle than finding and managing the property on your own. What distinguishes these platforms from the ones we talk about above however is that they are usually only exclusive to accredited investors – those with at least $250,000 yearly salary and/or $1,000,000 net worth.
Iintoo: This platform recently increased its reach with the acquisition of real estate platform RealtyShares, bringing an additional $2.5 billion in assets under management. This represents a huge increase from its previous $1 billion portfolio. Here you’ll find a wide range of U.S. commercial properties – everything from student housing to commercial development properties. It takes a $25,000 initial investment to get in on the action and terms vary from 12 to 60 months. Learn more about iintoo.
Roofstock: A registered real estate broker and marketplace specializing in single-family rental properties. Unlike its competitors, Roofstock isn’t selling shares of properties through trusts or LLCs — they’re connecting buyers and sellers directly. Roofstock properties are carefully vetted by a qualified home inspector and come with a rental income guarantee.
Pros of Real Estate Companies vs Regular Real Estate Investing
There are definite advantages to investing through real estate companies as opposed to traditional investment vehicles. Among these are:
- Cost: The buy-in is a lot less onerous when you’re investing with a real estate company. In particular, REITs can be most cost-effective — you can get in for as little as $500. Compare that to the cost of purchasing a property, getting it into shape and maintaining it, and either serving as a landlord or paying a property management firm for the privilege. You’ll quickly realize that real estate companies are the most budget-friendly way to start investing.
- Barrier of entry: The major barriers are experience and investment capital. When you opt to invest with real estate companies, these 2 factors are not nearly as crucial. Since you’re pooling your money with other investors, your initial outlay is relatively minimal compared to what it costs to purchase a commercial or residential property. Keep in mind that most real estate investors are financed by other individuals, not by banks. If you’re concerned about finding private funding, real estate companies are the way to go.
- Less risk: A good portion of the risk associated with real estate investing has to do with your duties as a landlord plus finding capital; neither of these applies when you invest through a real estate company. The company itself takes on the risk on your behalf, mitigating the danger of losing money.
Cons of Real Estate Companies vs Regular Real Estate Investing
However, there are also a few disadvantages. These include:
- Slow returns: Property may be a solid way to make money, but it isn’t the most rapid one. Often renovations must be done before the property itself sees a profit — and in turn, you see one as well. If you’re looking to realize a profit right away, consider an investment property that’s already tenant-occupied or a REIT; both will provide quick cash flow.
- Accessibility: While new investors can find a home with real estate companies, they won’t be able to do so with all such companies. Many deals are inaccessible unless you have $1 million in assets or at least $200,000 in annual income — and these can be the choice opportunities. This isn’t a deal-breaker but something to know as you start out.
- Risky asset class: While risk is mitigated by the lower amount of investment here, the fact that real estate company deals are backed by just one asset does amp up the risk a bit. If rents plunge, for example, you will feel the sting.
- Lack of liquidity: If you need the money now, you can’t simply sell a building. In fact, if you’re investing through a real estate company, expect to commit to at least 3 years. That means you won’t be accessing tons of cash any time soon.
What Else Should I Know?
Real estate investing is its own animal, regardless of whether you’re doing it through a crowdfunding platform or in a more traditional manner. Regardless of the venue, you have to be prepared to put cash upfront and be comfortable with the fact that this is not a liquid investment.
You’ll be making a commitment — and you won’t immediately be able to pull out your investment monies, so be prepared to stay with a property for at least 3 years. With real estate as with many things, time brings its own reward.