RealCrowd Online Investment Platform Review

RealCrowd Ratings at a Glance

If you are an investor in real estate - or you want to begin investing in real estate - you've likely heard of residential real estate investing. But if you want to invest in commercial real estate, it can be more difficult to enter the market. Until now. In this article, Benzinga reviews RealCrowd, an investment platform that allows investors to get in on commercial real estate without having to break the bank.

Regardless of their income level, almost every American makes economic contributions to commercial real estate every day. Think about it. Your favorite grocery and clothing stores both sit on commercial real estate. 

The same thing is true for your favorite restaurant, movie theatre and even your place of employment. Simply put, commercial real estate is all around us, making money for its owners every day. 

Perhaps that’s why so many institutional investors and growth funds are focused on commercial real estate investments. The simple fact that everyday life for most consumers requires them to participate in commercial real estate in one way or another makes commercial real estate a great wealth building opportunity.

Unfortunately, most of the best commercial real estate is so expensive that only a small percentage of very well-heeled investors can participate. RealCrowd was founded to combine the power of crowdfunding and technology to give a whole new class of investors a seat at the big table. 

How Does RealCrowd Work?

RealCrowd’s mission is simple; to give investors control over where their money goes by providing them with access to high-performing commercial real estate and growth funds centered on commercial property. RealCrowd’s founder created the platform after encountering an investor who was frustrated with the fact that the $50,000 they had to invest was still not enough to buy any commercial real estate. 

The company’s founders realized there was probably a large pool of investors who could buy equity in commercial real estate if they put their individual $25,000 to $50,000 contributions together. They set up the RealCrowd platform to allow investors to basically crowdfund commercial real estate purchases. Perhaps more importantly, RealCrowd has a nice range of equity investments and growth funds for investors to choose from.  

What that translates to for investors is an elevated level of investor control. RealCrowd specifically caters to hands-on investors, or owners of self-directed IRAs, who don’t like the idea of just turning $50,000 over to a financial advisor and letting them decide where the money goes. 

This business model is powerfully innovative because it works for both investors and commercial developers alike. There are a lot of developers who would prefer to raise money by offering equity instead of borrowing money and servicing debt. 

Most investment platforms, and most investments in general for that matter, have investor fees. RealCrowd is different because they are compensated by charging sponsors (developers) a flat fee to list on the platform and an investor processing fee which goes up based on the size of the minimum investment required by the sponsor.  What that means for RealCrowd investors is that the only money they pay to use the platform is what they contribute to their chosen investment. When it comes to investor fees, it doesn’t get much better than free. That’s why RealCrowd gets a full 5 stars here. 

Whenever you have a platform that prides itself on investor control, you walk a fine line between making the platform user-friendly and making it a little “too sophisticated” for a novice investor. In the case of RealCrowd, they straddle this line just about perfectly. The signup process is very simple. 

After setting up the basic email and password, investors will be invited to complete their profile. Since investors will be purchasing equity in their chosen offering, the profile creation process requires them to choose how they will be taking ownership of the property (such as individual, individual with spouse, LLC or partnership). There is also a handy box to check for those who will be buying as a self-directed IRA. 

Once this is done, investors will have to verify their accreditation status. Most of RealCrowd’s offerings require investor accreditation. After that’s completed, browsing RealCrowd’s marketplace for investments is an absolute breeze. 

You can’t give investors control without giving them the educational resources they need to effectively use that control. After all, there is always a chance that a potential investor who wants to invest in commercial real estate doesn’t quite understand specific terminology related to the field. RealCrowd understands this, and they have clearly put a great deal of resources into investor education.  

Image source: RealCrowd website

RealCrowd’s investor education section can be easily accessed by clicking the Resources tab at the top of the platform’s landing page. In keeping with the platform’s theme of putting power in the hands of investors, the resource page is titled “Choose the education that is best for you” and broken down into the following 3 sections:

• Frequently Asked Questions (FAQs)
• Real Estate Investing Courses
• Listen to the Podcast

The FAQ page walks investors through the basics of how the platform works, but by far the best part here is how much time is devoted to how to invest in RealCrowd with a self-directed IRA (SD IRA). Topics covered include:

• Investment Process When Using Self-Directed IRA
• What are the Benefits of SD IRA
• When is the Right Time to Set Up SD IRA
• How Does Debt Impact an SD IRA

While many online investment platforms are open to SD IRA contributions, very few of them spend the kind of time and energy RealCrowd in educating investors how to do that and what the ramifications are. 

The Real Estate Investing Courses section is basically a primer on how commercial real estate works and how it earns money. It enlightens investors as to the meaning of important terms like Internal Rate of Return, Equity Multiple and Cash on Cash Returns. These are all terms investors may be vaguely familiar with but again, it’s refreshing to see the platform go to such lengths to make sure that investors know exactly what they are. Learning all of this can only help investors make more informed decisions about what particular RealCrowd offering(s), they choose to put their hard-earned money behind. 

Last, but not least, is the podcast section. It’s an incredibly informative series of podcasts that covers everything an investor could want to know about the state of the real estate market, RealCrowd and real estate investing in general. 

Image source: RealCrowd website

In the modern digital era, where people are literally bombarded with article-shares and other things to read, it’s a big plus that RealCrowd has taken the time to create a passive way for investors to just sit back and learn. This is an outstanding resource and without a doubt the strongest portion of a top-notch investor education section. 

RealCrowd simply knocks it out of the park when it comes to investor education. That’s why RealCrowd gets a full 5-star rating.

RealCrowd offerings run the full gamut of commercial real estate investment opportunities. The currently featured opportunity is for Palisades at Pleasant Crossing, a value-add multifamily property in Northwest Arkansas sponsored by LURIN. The Palisades at Pleasant Crossing has a $50,000 buy-in and offers a targeted 28.45% internal rate of return with a 9% preferred return.

Outside of this, RealCrowd is accepting investments on educational properties, multi-family residential properties and even an office complex. All of these offerings have their individual pluses and minuses, and clicking on them in the Marketplace will allow prospective investors to review them in more detail. 

Again, the theme here is putting investors in control, which also means investors must do their own due diligence in deciding which investment is best for their needs. With that said, the variety of investments is nice, even if most of the buy-ins are between $25,000 to $50,000.

RealCrowd Returns

RealCrowd only launched in the wake of the passage of the 2017 JOBS act, and most of their closed offerings have not yet reached the point where they would make distributions. As such, there is no data on the website regarding past returns. Investors can easily take a detailed look at the offerings and their respective performance targets. Assuming these targets can be reached, RealCrowd investors should see some tidy returns on their money. 

RealCrowd was set up to bring commercial real estate opportunities closer to everyday people who had money to invest, but not enough money to buy commercial properties outright. RealCrowd has filled this hole in the investor market with a user-friendly platform that features an excellent investor education section and a truly innovative take on commercial real estate crowdfunding.

Add all that to a wide range of zero investor fee offerings and you end up with a platform that is worthy of consideration by independent investors and/or self-directed IRA holders. It would be nice if there were more offerings with lower buy-ins, but considering that investors are buying equity in commercial real estate, the $25,000 to $50,000 buy-ins are not excessively high either. 

Overall, it’s a great platform with a great business model. Whether or not it’s for you depends on how much control you want to have over your investments and your individual risk tolerance. The final word: 4.5 stars.