Experiment: RealtyShares

The RealtyShares Experiment

Now that I’m a father, I’m even more careful when evaluating rental properties since purchasing the wrong home means time spent dealing with tenants and away from my family. Companies like RealtyShares,  RealtyMogul  and PeerStreet offers a way to diversify your portfolio with real estate investing without a long term commitment and day to day responsibilities. Over the next year I will document my RealtyShares experiment.

RealtyShares caught my attention because they allow me to access real estate investment opportunities from anywhere. They don’t talk about their performance but they do make broad statements that Real Estate investing in general is a good investment. This is one area I think they can do a better job even before investing with them. A statement that they beat the market 2:1 since 2000 but then have a chart that shows them under-performing over the last 12 years is contradictory.

realtyshares vs. sp500 since 2005

Investment Strategy

RealtyShares offers 3 types of investments: senior debt, equity, and preferred equity. My strategy will focus on investing in debt deals with a maturity of at most 1 year. I will look for properties purchased below market value (using zillow to check past sales) and a loan to value (LTV) ratio under 70%.

The reason I am choosing debt deals only is because of the security. Loan on Debt deals are secured by the property. They are at the bottom of the capital stack which means they have priority when it comes to claiming a payout from the property.

Account Details (as of July 2017)

July 2017 RealtyShares Summary

Historical (cumulative earnings)

July 2017 RealtyShares Earnings

Updates

[Jul ’17] The last property I signed a deal with also paid the loan off early. But I do like the variety of debt deals across the US they have. Also, the monthly interest depositing directly into my savings account is great. What can improve is the lag time from signing a contract to actually accruing interest.

[Mar ’17] Interest has been flowing well directly into my bank account. For tax documents on debt deals, RealtyShares sends out a 1099 or K-1  depending on how the deal was structured. One property paid the loan off early so I just received my capital plus 2% interest on a 60 day loan.

[Dec ’16] Two surprises: (1) contracts signed and took almost 2 months to close on pre-funded debt deals. During that holding period you will not receive any interest. (2) Dashboard will state “capital pending” but cash is not withdrawn until receiving notice that the deal has closed.

[Oct ’16] Invested $14,000 over 3 Debt deals (locations in Michigan, Tennessee, and New Jersey).

 

 

Note: I have no affiliation with RealtyShares and do not benefit financially if you invest with them. This page and all others on the site are intended for informational purposes only.

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