Crowdfunding vs Turnkey -for passive investing/ wealth building

[Tim C.]

Hello good people of BP!   I'm currently a armchair Crowdfunding RE investor and have been researching turnkey investments for passive income and wealth building.   I have had pretty good #s ( 8% cash on cash) on average on 8 deals over 24 months, plus appreciation (i hope)with crowdfunding, I tend to stick with the stricter platforms (RM) who vet the deals very tightly in my humble opinion so my survival chances are greater with each deal.  The only thing I'm not getting is leveraged appreciation you get with a mortgage which is a exponential wealth builder... which I would like.  That said, I have read a lot of the posts and learned a lot about turnkeys on here... and it seems like its not as "passive" as crowdfunding.   I have also called and spoken to a lot of the turnkey companies who post on here and from what I gather you are paying for a renovated house with all major problem areas ( roof, heat/ac systems, floors/walls, electric and plumbing) redone to new or almost new.  The price of this seems to be at market or a little over market prices.  If one buys at or a little above market prices then gets 3-5 months vacancy right off the bat they will be underwater fast... should the market also take a dip, even with 30-35% down ( which some turnkeys are asking for) you could be underwater in equity and will need to hold for 3-5 years to break even. ( also many other factors didn't mention, location.. location.. location)   On the positive side.. I think housing demand will go up. Recently Roofstock got a big round of funding and it will challenge the private costly turnkey model.  The one thing that sells me is the PM.. the independent turnkeys that have a good reputation of taking care of the house after the sale seem to be the most popular turnkey companies.... and that seems to be the deal closer for me. 

I believe the macroview is up, I want to leverage myself with 10-20 house in a few growth cities where a good turnkey can help me purchase, then have the rent pay me 6-8% cash flow, pay for expenses and mortgage while I ride the wave up and sell in 20 yrs....... but 10-20 houses will require me to keep up with PM, loans, fees, contracts, possible lawsuits.  Is it worth the time VS the truly passive, no legal recourse, crowdfunding R.E model even tho you don't get the leveraged appreciation?    Did anyone ever crunch the #s going back a few yrs  turnkey(leveraged up) vs crowdfunding ( all cash)..  any thoughts, opinions and comments welcome.. I am curious how real estate investors who do it part time or a few hours a week feel about this?

 My aim is to spend less than 10 minutes a day on my investments  =)  

Thanks for reading.. I can babble on, misspell and go on different train of thoughts all in the same sentence.. lol  

Thx!

[Mark Robertson]

I agree 100% with Ian.  You do get leverage and tax benefits with Crowdfunding.  I've made over 80 crowdfunding investments over the last 30 months and the average leverage is 65 to 70% (as high as 80%).  My cash flow has averaged 10%, but my taxable income has been less than 4% of my equity invested.

I have yet to lose any equity in a CF deal, but a couple have broken even and one looks like a 10% loss or so unless the platform steps up and covers the loss (promised but we shall see). I had one investment that more than double my money in less than 24 months. The key to me is I never gotten a phone call about plumbing or noise complaints etc ... that can happen with turnkeys.

The #1 advantage of crowdfunding is deal flow and diversification both geographically and by asset type.