mailbox money
Issue 61 - December 3rd, 2021
So you say you want to be a real estate investor?
In my career, I have had countless clients and friends ask me my opinions about getting into “rental property investing”, and my resounding answer for most people is “don’t do it!”
I wrote another post on this topic back in August, and you can read that one called “Landlord Life Is Not Fun” for more insights too.
HGTV, podcasts, YouTube, blogs, and other sources have popularized single family rental investing and property investing in general in the last few years, and some people (incorrectly) assume that the owning of a rental property is as easy as buying a property, throwing a for lease sign in the yard, and then starting to stack that paper with monthly rental checks!
A dream path investment to an early retirement is a lie a lot of people tell themselves as they take on loads of debt and don’t fully understand the end to end responsibility and needs of being a prudent real estate investor.
I think this is a severely flawed and short sighted way to get exposure to the real estate investing market when so many other unique and alternative options exists today.
I do LOVE real estate as an investment, and I want to highlight some alternative ideas outside of the “direct” ownership route that may give you great exposure to what you want without all the headaches.
RoofStock One: invest in single family rental home portfolios with as little as $5,000 to start
FundRise: Our assets drive your returns. We pair our extensive network and expertise with the collective buying power of our investor community to acquire high-quality assets ranging from debt to equity, commercial to residential, and more.
REITs - I personally love REITs due to the yield and liquidity of these securities. If you love “industrial real estate” then check out STAG; if you love “single tenant commercial properties” then check out O; if you love “apartments” then check out Sam Zell & Equity Lifestyle’s family of REITs; if you love “cell phone towers” then check out AMT or CCI; and I think you get the picture, but do your research on REITs as you may be surprised at all of the options.
Doorvest: Doorvest helps you identify, purchase, and own your first (or 10th!) rental home for as little as $35k. Generate passive, reliable income from day one.
Peerstreet: Introducing the first marketplace for investing in real estate debt. Now you can invest in the loans made to borrowers, and as they pay back their loans, you make money.
Realty Mogul: Diversify with thoroughly vetted commercial real estate with the potential to generate income and grow in value.
CrowdStreet: CrowdStreet is a real estate investing platform that gives investors direct access to individual commercial real estate investment opportunities, allowing you to review, compare, and personally choose the deals that meet your own investment criteria. Our managed funds and advisory services give you the same level of access, but we’ll handle the portfolio, making it even easier for you to invest.
DiversyFund: At DiversyFund, we make it easy to buy shares in a portfolio of fully vetted, multifamily real estate. With the click of a button, you could own a piece of our fund across multiple properties. Your portfolio will be designed to function with one goal in mind: To grow your net worth like the 1%.
EquityMultiple: EquityMultiple is a commercial real estate investment and technology firm that provides accredited investors access to professionally managed, private real estate transactions across property types and risk profiles. EquityMultiple’s mission is to make real estate investing simple, accessible, and transparent. To date, EquityMultiple’s investors have participated in over $3.2 billion in commercial real estate transactions through its online investing platform. The firm pairs innovative technology with real estate experience and industry-leading investor services to offer an unparalleled investing experience.
Newsworthy Links To Share
Cracker Barrel Goes to Hollywood To Deliver Southern Homestyle Cooking From a Ghost Kitchen (CoStar)
Metaverse Real Estate Piles Up Record Sales In Sandbox and Other Virtual Worlds: A growing number of investment firms are acquiring digital land in worlds such as the Sandbox and Decentraland, where players simulate real-life pursuits, from shopping to attending a concert. They are betting that individuals and companies will spend money to use virtual homes and retail space and that the value of properties will increase as more people join the worlds. (WSJ)
The metaverse real-estate boom is on: A company called Republic Realm has paid $4.3 million for land in a virtual world called Sandbox. (Protocol)
There Are No Easy Answers for This Risk: Investors are turning to hedges like real assets to protect against the potential of long-term inflation. But there is no magic bullet to offset the dangers of rising prices. As a result, the current outlook for real asset funds — particularly infrastructure — is the most bullish it’s been in years, according to one source, PitchBook’s 2021 global real assets report released this week. (Institutional Investor)
DeFi interest grows as stablecoin issuance jumps to $152B in November: Morgan Stanley (Seeking Alpha)
Lessen, an Scottsdale, Ariz.-based property services platform, raised $170 million in Series B funding led by Fifth Wall and was joined by Khosla Ventures, General Catalyst and Navitas Capita (Lessen.com)
New Cannabis REIT going public: Chicago Atlantic Real Estate Finance, Inc. is a newly formed REIT. The current portfolio is mostly first mortgage loans to state-licensed operators in the cannabis industry. (Greenmarket)
PODCAST HIGHLIGHT: THE FORT PODCAST: KEITH WASSERMAN – FOUNDER OF GELT INC. Chris chats with Keith Wasserman, Founder of Gelt Inc. which is one of the fastest-growing real estate companies in the country. Gelt focuses on purchasing multi-family communities, storage facilities, and RV parks. (The Fort Podcast with Chris Powers)
The ultimate Christmas sleepover: You can now rent the real-life Home Alone house on Airbnb (Daily Mail)
The Consumer Federation of America pushes for an end to the sharing of commissions between listing and buyer brokers to spur price competition. A new report by the Consumer Federation of America (CFA) on residential real estate commissions – The Relationship of Residential Real Estate Commission Rates to Industry Structure and Culture – shows that buyer agent commissions are highly uniform. This rate uniformity is strongly supported by the industry’s compensation system in which home sellers pay the commissions of both the listing agent and the buyer agent. Uncoupling (or untying) seller and buyer agent compensation would spur price competition that would substantially reduce the some $100 billion in commissions paid annually by consumers.
“The current commission system is designed to thwart price competition among agents,” said Stephen Brobeck, a CFA senior fellow and the report’s author. “If home buyers were allowed to negotiate their agent’s commission, agents would be encouraged to compete on price and service,” he added.(Consumer Federation of America)