Well hey there! This is Seth from the REtipster Blog
and today I wanted to show you about this interesting website I discovered a few
months ago and it's called "RealtyShares" and the reason I want to tell you about
this is because I get emails every so often from readers who - they don't
necessarily come out and say it this bluntly but... basically what their issue
is, is they've already done fairly well financially, they have a good nest egg or
a pretty good income and the idea of investing in real estate sounds really
appealing, not only is a way to diversify
but also to earn a better return on their investment and maybe even develop
some kind of streams of passive income, but the problem is - these people really
have no experience, no real, practical know-how when it comes to finding deals,
financing them the right way, getting proper management, doing rehabs, all this
stuff... there is a TON of skill and just industry knowledge that is baked
into those things if you want to do it and succeed at it.
For those of you who are out there running real estate investing businesses
whether it's house flipping or rental properties or land flipping like I do...
ALL of those things inherently require a lot of knowledge and experience in
order to do it without losing your shirt and really hurting yourself.
So if somebody doesn't really have the experience or even really the desire to
learn how to do all that stuff and to build a new business and everything that
comes along with that, I think this site right here - RealtyShares could be a
really good option just in terms of making it very easy for people to invest
smaller chunks of money in actual real estate investments. And again, I'm still
getting acquainted with it but from what I've seen of this site, it seems pretty legit.
I actually just signed up for an account a few days ago and I've been looking at
some of their investments and the way this site works is - there's a team
of underwriters who looks at a lot of different real estate projects across
the country and they only accept about 2% of those projects and then
of the projects that get approved and basically meet all the standards
required to make up what they consider to be a good real estate investment
(one that has a pretty reasonable likelihood of succeeding),
they put them on here and essentially you can invest your money in increments
of $5,000 or higher
and in some cases you can even invest less than that, depending on the
type of deal you want to invest in. As I was looking through the site, it almost
reminded me of a micro lending platform, where you can just invest
smaller amounts of money without putting up ALL the funds for the entire loan
just kind of play a smaller part in that - and then in time, that loan gets paid back,
you get your investment back and then you can reinvest it. The difference is
that this particular site is geared specifically towards real estate
investing and the types of these you can invest in are "debt deals", "preferred
equity deals" and "joint venture equity deals" - and the difference between those
are with like a debt deals and preferred equity deals
you're investing in a loan, so the funds that you put into the
project are lent out to another real estate investor who buys a property,
rehabs it, flips it or does some kind of improvement and then sells it for a
higher amount and then you get paid interest during the term of that loan
and when it's all paid off, you get all your money back and you can then
reinvest it
(and that's assuming everything goes according to plan). Whereas with a joint
venture deal, you are actually owning a portion of that property.
RealtyShares shares will create a new, unique LLC for that property and then
buy it and then you have an ownership in that LLC through the investment of the
property and depending on whether you want to invest your money and get it
back really quick (like, within a year)
or whether you want to just invest in park it and then get a higher return over
that period and then get it back after like, 5 years
there are different pros and cons that come with the type of investment you
want to do and what your long-term goals are. But anyway, what I want to do in
this video is just give you a quick look at what RealtyShares is all about,
show you what their website looks like, how you can find deals and invest
in them and - I'm not going to say this is the perfect fit for everybody
because it's not. You actually have to be an Accredited Investor to even be
allowed into this and to start seeing the deals and investing - which basically
means, you either have to have a really good income or a nest egg saved up and then
you can get into this site and
start investing. So I'm going to just show you how this all works - what you're
looking at right here is the home page and it's fairly easy to sign up for an
account, all you have to do is just enter in your email address and password
so I'll go ahead and do that right here. Now keep in mind, when you're creating your
password you actually have to use an uppercase and lowercase character so
just do that or it's not gonna let you through and you just click the sign up
button and then it's going to show you a page like this and this is basically
asking whether you want to be somebody who is GETTING money to finance your own
project or whether you want to INVEST money - and for the purpose of this
tutorial, I'm showing you how you can INVEST if you want to put your money
into a project. Now right here, you just put in
all your information and click continue and then this is where it starts to get
a little bit more specific about who can be involved and become an Accredited
Investor with the site. Basically you either have to be an individual with an income
of more than $200K per year for the past 2 years, or have a net worth
exceeding a million dollars excluding your primary residence, or if you have a
joint income with your spouse exceeding 300K for the past two years that would
also qualify you or if you invest on behalf of a business entity with at
least five million in assets or business in which all equity owners are
accredited investors
so basically you can't really get past this point unless one of these things
applies to you.
I'm gonna go ahead and click on this one right here to start this off you can go
ahead and add your bank account, so basically it would draw your investment
funds directly from that or you can just add it later and skip this part for now
Then it's going to ask you to verify your email address - I'll go ahead and do that quick.
When you go and check your email it's going to look something like this.
Let's go ahead and click that - and then something you'll see right off the bat
is - the SEC typically advises that investment companies like RealtyShares
wait a period of 30 days before they let the investors start investing, so
they called us the "cooling off period". However, another thing you can do if you
want to bypass this is to go ahead and fill out the "suitability questionnaire" and
this is something you have to fill out either way before you proceed
so it's something you might as well just go ahead and do if you want to get started.
If you want you can also check out this video if you need more information and
near the bottom it shows some examples of
past investments, just so you can get an idea for what those look like.
So anyway, let's go back up here - I'm gonna start filling out the suitability
questionnaire and give you an idea for what that looks like.
In this case, if you've got your own LLC or trust and you gonna be investing
through that, you could signify that here. In this case, I'm just going to say no,
I'll just be doing this personally.
I'll go ahead and put today's date in here and click Submit and at this point
we'll just have to wait for the representative from RealtyShares to
contact us and verify anything else they need to know before we can move forward.
So I'm going to wait for that and once I've been allowed in to see the
investment opportunities
I'll pick this back up and we can take a look at that and just give you an idea for
what that looks like.
Okay I'm back - it's been about 24 hours. I actually ended up getting a call from the
representative at RealtyShares a few hours after I completed my questionnaire
so it was really pretty quick process and the conversation we had was
informing me of the risks and making sure I understood how everything worked.
It was really a pretty easy conversation and they went ahead and approved my
account and let me start browsing opportunities so - I just logged in here
we can either go up here and click "Explore Investment" or we can go over here and just
click this orange button. The way this works (as the guy explained it to me
on the phone) is any deals that were already out there on the open market
prior to me getting approved - I can't get access to those, so it looks like there's
currently 5 open investments and all of those investments were already out
there and no new ones have come online since I got approved (like, an hour ago) so
normally what you're going to see here
(and by the way, you'll notice a lot of the stuff is blurred out that's because
I can't show it for confidentiality reasons, but hopefully this will just sort of give
you a vague idea of what the information looks like and how its laid out) but
basically there are these buttons down here that say "Unavailable". If those were
newer ones that had just come out, instead they would be a big orange
button that would allow me to click on it and start investing money. There is some
information here regarding the return percentage, the minimum investment required,
the approximate location where the property is located,
how much has been raised to date and how much more they still need. If we scroll down
here we can see some other ones. As you can see, there's just some different types of
properties - we've got a retail building here, we've got a residential opportunity
right here, it looks like a bunch of apartment buildings maybe. This one here
is a single family house.
If we go up here, we've got a multi-family here at the top
single-family and multi-family... so you can kind of get the idea.
There's different types of properties and different "minimums" in terms of how much
you have to invest in order to get your foot in the door on these deals.
I'm going to click on this one just to see the investment details and as you
can see, there's just a nice investment summary. We can click on some photos to
see more details on that.
Just get an idea for what these properties look like... we can scroll down
here, you can see the target holding period, minimum investment, Target IRR, we've got a nice
investment summary and click and see financial information, click on the
property, just see a summary of the property, some details of how many units
it is and where it's located
when it was built, what they're planning to do with the acquisition and maybe
even the rehab of this property if that kind of thing is involved. Market summary
just so you can kind of get some ideas for what the statistics are in the
demographics of the area, management of the properties (who is going to be
managing it all the way down to the individual principles who will be on the
management team) and then the documents tab - it looks like we've got a track record,
comparables analysis, investor package, financial summary
so we can download this stuff and just get a better look at what everything is
going to look like
take a look at the track record see what that's like - again I have to blur all
this stuff out because I can't just show this to the public unless you're an
accredited investor, but I can just tell you from my nearly 10 years I spent in
the commercial banking world
this is like, all the same stuff that bankers and underwriters look at
when they're deciding whether or not to lend money on a property.
This is very standard - what you would expect to see a big commercial
bank looking at before jumping into any deal - so these guys seem to be the real
deal and just from what I can see here, they seem like they're looking at all
the right stuff and analyzing the deal appropriately and developing a good
understanding of what each project entails before they invest anybody's
money in it. In terms of whether I'm going to be investing my own personal
funds in any of these, I honestly don't know yet. I'm certainly open to it, but I've
got a number of projects on the table that I'm looking at this year so I may
or may not, but if I do, I'll certainly do a follow up video or
blog post and just let you guys know how it's going, what the experience was like,
how the process went
and if it's earning the way that these guys were expecting it to earn. And for that
matter, if YOU end up signing up for this site and becoming an accredited investor
by all means, be sure to leave a comment below and let us know how it's going.
Let us know what the experience was like, how your investments doing -
I'd just be curious to know from everybody else out there how it went and what the
experience was like. If we go back to our dashboard
again there's not anything here because I haven't invested in anything yet but
if I had, I could go ahead and click on these tabs and see a summary of my investments,
take a look at a graph showing my earnings just so I could track where
things were at and how they're going. I can see statements (probably for tax purposes)
and that kind of thing...
we can go to the tax center, bank accounts - again I have not added my bank account
yet but that's pretty straightforward and easy to do - and really that's all
there is to it.
As you can see - as time goes on, these investments will turn over
and old ones will go away and new ones will come online and you
can take a look at them as time goes on. I think there's many different kinds
of players who are on this site. There are probably people who have millions and
are constantly putting money in and getting the money back and there's
probably people who just put in $5,000 at a time and just kind of
wait for it to see what happens. When I was talking to the folks at RealtyShares
I was told that there's somewhere around 20,000 accredited investors on
this site right now, so it's not really a tiny operation. There's a lot of people
who are involved with this, and the average investment size per investor is
somewhere around $12,000 and I guess the average number of
investors involved in each project is somewhere around 55 -
so that just gives you an idea of how that all works and the typical investor
and project size and how many people are involved.
That's really all there is to it. Again, I'm not saying this is the
perfect fit for everybody, I think there's certainly people who would be
better off running their own business and finding their own deals and kind of
handling it all themselves. Some real estate deals can be extremely
profitable and if you are willing to handle it all in-house, you can take all
of that profit... whereas this is more for the investor who wants to kind of sit
back and not do all the hands-on work but just put their money in and let it
work for them.
The returns may not necessarily be as big and they certainly won't
have the kind of control that they would if they were buying a property and
managing everything themselves, but that's kind of just the trade-off that
comes with whether you're looking for a hands-on investment or hands-off investment.
So hopefully this video gives you a good idea for what RealtyShares is all
about and how the site works and I think it's certainly not a bad option
especially if you're somebody who doesn't have the experience or knowledge
or even the desire to figure out how to run your own real estate investing business,
this could be the next best bet if you really want to be involved with real
estate investing on some level.
Just so you know I do have an affiliate relationship with these guys,
I don't want that to sway your opinion on anything but I just want to be upfront
and let you know I will get a small commission if you decide to sign up
through the link beneath this video. Also keep mind, if YOU end up signing up
you can also refer people to the site to and get paid for it... so it's not a bad
deal if this is something you want to jump into with both feet,
there can be some nice money-making opportunities from a few different angles.
If you're interested be sure to check it out to the link below,
as always I appreciate your support more than you know,
and whatever you decide to do, I wish you all the best on your next real estate deal.