Crowd Source Investing

[Joe Krug]

I am a physician. For years, I owned and self-managed or had a property manager for up to 5 SFR at a time. After a divorce, I sold all 5 properties and made money (1 was basically break-even). However, managing was time consuming. After doing what I thought was diligence, I decided to use several crowd sourced RE investment vehicles. I invested in 9 different investments across 3 different platforms.

So far....3 closed investments with complete return of principle making 9-12% annualized but taxed at short-term capital gains rates. 1 default with a 64% loss of principle (on a borrower who was a "repeat borrower" on the platform). 1 equity investment that in 20+ months has paid less than 2% and currently is looking to re-finance (and this was on a borrower who had "3 prior investments" with this particular platform). 1 pending closure with full return of capital. 3 investments that are paying between 3-9% annualized. 

There seem to be many who tout the benefits of this "passive" means of investing. However, my experience has been awful. 2 of the 9 have basically ruined the other 7 investments. Even with diversification being "the only free lunch" (Thanks Cramer) I have lost money. In addition, I am taxed at the most unfriendly of rates. 

Did I miss something entirely about this asset class? Do people have a better way of doing this? When my monies come back, I am done with this as a class. I could see hard lending for periods of >12 months to get long-term capital gains rates, but this is ridiculous.