All Forum Posts by: Jim Groves

The debt CF sites like Patch of Land and Peer Street offer shorter term loans you can put the money into, but bear in mind that your return is basically capped at the interest rate and you'll be paying taxes on interest income (but you'll pay taxes either way).  As far as learning through those investments, I'm not sure it would give you any great insight.

I personally prefer REITs to CF but if your time horizon is that short you're better off not getting into the stock price volatility of a REIT stock.

The traditional syndication presumes that there is already a relationship between the investor and the sponsor, so that alone makes it a superior method.  Crowdfunding has the advantage of accessing new sources of capital that the sponsor wouldn't have otherwise found.  The other advantage is the technology and ease of communication/distribution.

In agreement with Scott.  I only know the rules at a high level and have reviewed some portfolios of SBA loans backed by real estate.  The bank underwrites the loan and handles the paperwork. The government provides a first loss guarantee so the bank can offload a fair amount of the risk.

In real estate, the common thread is that the building is owner occupied for an operating business (restaurant, store, medical office, etc).  It is not used for third party rentals or fix and flips.

 Maybe this is a dumb question, but why (if I'm putting in most of the equity) would my return be capped at 10%? Is this the offered preferred return? If you're offering a split "depending on your experience" then it should be stated upfront.  Even the most passive equity partner deserves at least 30-40% of the promote.

 Fair point, you didn't say that ALL direct investments are safer.  But the first part of my comment remains.

I'd re-read what he said- "REITs are reasonably safe". You're referring to their fees, which has nothing to do with the safety. I do not agree at all that direct investments will be considered safer than a REIT investment, but they will pay more in overall return.

Fundrise came up first in Google because they're arguably the #1 player in real estate crowdfunding, or at least in the Top 5. They are also exiting the crowdfunding space to concentrate solely on their eREITs. There have been a couple of threads already that discuss them. If crowdfunding is a passive play, a REIT is even more so because you're investing in the manager more than the assets. If you choose to go that route, I believe the public mortgage REITs provide better value.

If you're more into selecting the project on your own there are plenty of those available. Just know that most equity deals offered on platforms like Realty Mogul, RealCrowd, etc have minimum investment sizes of at least $10K-$25K so it makes it kind of hard to diversify. The loan sites like Peer Street or Patch of Land have lower buy-ins, but you'll have to pay taxes on your interest. That's why I buy into those deals through a self directed IRA that I manage.

If you want diversification, another option is AlphaFlow.  Think of it as a fund of funds.  They do the due diligence and invest through a pooled fund, so you get exposure in multiple deals for a lower size.  In exchange, you're paying about 1% off of your return so it can be expensive but seems like a reasonable option for somebody that wants passive income with diversification.

If you already have access to the investors, I'm not sure why you would consider an e-REIT. The e-REIT is just another form of soliciting outside money, it's not an alternative to a investment partnership. You would need to form some type of operating agreement anyway regardless of how you plan to solicit the money (general solicitation or friends and family)

I haven't used the software either, but I've met Doug Ellenhoff at a lawtech event a few months ago.  There are a number of legal software startups out there but iDisclose is the only one that I know of that does boilerplate PPMs online.  The thinking here is that there is a ton of boilerplate language that can be tweaked with reasonable customization with the use of some basic questions and inputs.  Anthony Zeoli had a nice summary of it:  https://crowdfundinglegalhub.com/2015/10/02/idiscl...

Agree.  For a second I thought that a fresh round of capital has come into the space, but that was over a year old.  Has anyone seen any announcements like this in 2016?