In my investing career, I have made numerous real estate investments with varying sizes and types, resulting in a wide range of returns. This article provides an update on my seven completed passive real estate investments and seven ongoing investments, highlighting my returns and time invested for 2023.
Why So Many Real Estate Investments?
You might be wondering why I've made so many real estate investments. Well, there are a few reasons. Firstly, I wanted to start small, dipping my toes in the water with small sums of money. It's the best way to learn how these investments work by becoming an investor yourself with a tiny sliver of your portfolio.
Secondly, some of these platforms have had advertising or referral relationships with me. If I'm researching and presenting them as potential investment options, I should feel comfortable investing with them myself, which I have done in most cases.
Thirdly, diversification is crucial when it comes to any asset class. In the case of crowdfunded real estate, there is no Vanguard with 40+ years of experience. The JOBS Act that allowed for these platforms has only been around since 2012, so it's important to diversify across different platforms.
Lastly, I believe in gradually wading into these waters. Jumping into the deep end of the real estate pool can be overwhelming and risky. It's better to start small and gradually increase your investments as you become more comfortable and knowledgeable.
Ongoing Deals
Let's take a look at my ongoing deals. Reporting the total return to date can be challenging since these investments have not yet gone full circle. However, when an up-to-date Net Asset Value (NAV) is provided by the platform, I'll use it as an estimate of the current value.
Fundrise
One of my ongoing investments is with Fundrise, where I've been invested since January 2018. Fundrise offers eREITs, a collection of various real estate investments. I've chosen to take my distributions in cash, which they pay quarterly. Fundrise updates the Net Asset Value of their holdings, allowing you to see the growth of your investment over time and estimate your total returns.
My investment in Fundrise's diversified multifamily portfolio has yielded an Internal Rate of Return (IRR) of nearly 11% over five years. I've been pleased with the performance and communication.
Caption: My Fundrise allocation
My Results with Fundrise:
- IRR: 10.86%
- Days Invested: 1810
- Total Return on Investment: 58.43%
RealtyMogul
Since April 2018, I've been invested in RealtyMogul's MogulREIT II. The goal of this investment is to realize capital appreciation while providing regular income. I've received quarterly distributions since July 2018. RealtyMogul regularly updates the NAV, which took a hit during COVID but has bounced back.
The MogulREIT II consists of nine multi-family equity deals in four states, with a focus on six apartment complexes in Texas. Liquidity options vary by investment, and penalties may apply for early exits.
My investment in RealtyMogul has resulted in an IRR of 8.67% over the past few years. Although the returns are not as high as some of my other investments, I'm satisfied with the performance.
My Results with RealtyMogul:
- IRR: 8.67%
- Days Invested: 1738
- Total Return on Investment: 43.40%
AcreTrader
I've always had a connection to agriculture, and with AcreTrader, I now own a small piece of a row crop farm in Arkansas. Since July 2019, I've received annual distributions based on rental income. AcreTrader works with farmers to improve crop yields and holds the property for 5 to 10 years, aiming to sell at an advantageous time.
AcreTrader has had several investments go full circle, and they've generally performed better than projected. While I cannot estimate my total return yet, the regular updates on the productivity of the acreage indicate that everything is going according to plan.
DiversyFund
DiversyFund offers the DiversyFund Growth REIT, in which I've invested since July 2019. This fund aims to match their historic performance of an IRR in the 16% to 18% range over a five-year hold period. There is no liquidity option during the hold period.
Without an updated NAV, I cannot estimate my total return; however, I have received cash distributions, with my first distribution being over 18% of my initial investment.
Medium-Sized Deals ($25,000 to $50,000 investments)
Moving on to my medium-sized deals, I've invested with Crowdstreet, an active platform that offers various real estate investments. I've invested in two separate ground-up builds in Texas, both with projected IRRs greater than 20%. These investments are anticipated to be fully realized in 2023 to 2024.
Crowdstreet investors have funded 580 deals, with an average IRR of 19% for the completed deals. Although these investments have not yet generated returns, the communication from Crowdstreet has been excellent, with quarterly updates and progress pictures.
Big Deals (Six-Figure Investments)
Lastly, let's discuss my big deals, where I've made six-figure investments.
Origin Investments
I've invested in the IncomePlus Fund offered by Origin Investments since September 2020. This evergreen fund aims to provide a tax-neutral distribution of about 5.5% to 6% annually, with additional capital appreciation. Origin Investments updates the NAV per share monthly, allowing investors to track their total return.
My Results with Origin Investments:
- IRR: 13.37%
- Days Invested: 512
- Total Return on Investment: 22.99%
SFR3 via Republic Real Estate
SFR3 is a fund that purchases and renovates distressed homes for rental workforce housing. I invested in it via Republic Real Estate, a platform that offers a variety of real estate investments. This investment allows me to profit from single-family home rentals in a passive way.
My Results with SFR3 via Republic Real Estate:
- IRR: 52.2% (annualized)
- Days Invested: 210
- Total Return on Investment: 27.5%
Completed Deals
Now let's look at my completed deals, where investments have gone full circle.
Alpha Investing
My first completed investment was made in July 2019 with Alpha Investing, a low five-figure investment in an apartment complex in Arizona. I received small quarterly distributions until the property was sold in December 2020, resulting in an outstanding return.
My Results with Alpha Investing:
- IRR: 50.45%
- Days Invested: 512
- Total Return on Investment: 76.5%
Republic Real Estate Deal #1
My first investment with Republic Real Estate was in a luxury Miami condominium purchased at a discount. The investment included a small income component from rental income, but the main return came from the proceeds of the condo's sale in the summer of 2022.
My Results with Republic Real Estate Deal #1:
- IRR: 8.86%
- Days Invested: 897
- Total Return on Investment: 22.90%
Republic Real Estate Deal #2
My second investment with Republic Real Estate was a loan for a fix-and-flip project in Los Angeles. The property was sold after renovations, resulting in a 27.5% return in just seven months.
My Results with Republic Real Estate Deal #2:
- IRR: 52.2%
- Days Invested: 210
- Total Return on Investment: 27.5%
EquityMultiple
I made a low five-figure investment with EquityMultiple in January 2018. It was a value-add apartment complex project in Connecticut that faced delays due to COVID. Eventually, the property was sold, resulting in a positive return, although not as high as expected.
My Results with EquityMultiple:
- IRR: 2.49%
- Days Invested: 1,204
- Total Return on Investment: 8.21%
PeerStreet
In January 2018, I invested with PeerStreet, a platform that provides short-term loans to fix-and-flip projects. I received monthly interest payments until my investment was returned in January 2020.
My Results with PeerStreet:
- IRR: 8.54%
- Days Invested: 705
- Total Return on Investment: 15.90%
DLP Capital Partners via CityVest
My investment with DLP Capital Partners was made in April 2019 via CityVest's access fund. This investment involves the DLP Lending Fund, which provided quarterly dividends until the investment was liquidated in November 2022.
My Results with DLP via CityVest:
- IRR: 8.68%
- Days Invested: 1,301
- Total Return on Investment: 29.51%
RealtyShares
My investment with RealtyShares was a short-term debt deal for a quadplex in Albuquerque, New Mexico. The investment went full circle in July 2018, and I received my 1099 for interest income as expected.
My Results with RealtyShares:
- IRR: 6.98%
- Days Invested: 152
- Total Return on Investment: 2.94%
VGSLX
Lastly, my first passive real estate investment was in the Vanguard REIT index fund (VGSLX). I held this investment from July 2013 until August 2021. Although I cannot calculate my specific returns, Morningstar reports a total return of 107.62% over the entire period.
My Take on Passive Real Estate Investments
Passive real estate investments have been an essential part of my portfolio, and I continue to see their value. Starting with small investments and gradually diversifying has allowed me to learn and grow in this asset class.
It's crucial to do your research and become familiar with the platforms and investments you're interested in. As an accredited investor, you have access to a broader range of opportunities, including individual syndications. However, if you're not accredited, options like eREITs and various offerings at Republic Real Estate are an excellent way to start and learn.
Passive real estate investments are not without risk, but they have the potential to generate significant wealth. My plan is to continue growing my investments in this space, aiming to allocate about 20% of my portfolio to passive real estate.
Remember, investing in real estate requires careful consideration and diversification to mitigate risks. Be sure to consult with a financial advisor or professional before making any investment decisions.
Disclaimer: The author of this article is an accomplished investor and may have advertising or referral relationships with some of the mentioned platforms. Please conduct thorough research and consider your individual financial goals before making any investments.
