01-12-2015, 12:29 AM
It's now been one year since I initially invested in a crowdfunded offering. What a learning year it has been--types of deals offered, changes in the market, which portal stands out (from an investors standpoint,) what is the mindset of the crowd, etc. That last aspectis an ever growing collection of data and of interest to me.
Mostly, this post is to give an update of real world results of investments. It's only been a year and probably not long enough to judge adequately all the equity deals done, but it's a start.
Debt deals:
Patch of Land - 2 deals funded, both at or below 50% LTV, 12-13% APR. Both have paid monthly interest regularly. One deal was estimated to last only 6 months, but the borrower keeps changing his mind on whether to sell or refinance. Note term is 12 months, so borrower still has a little time to decide, so I cannot complain.
RealtyMogul - 2 deals funded, one was paid off in less than 6 months, the other matures at the end of this month (1 year term.) Interest paid regularly, no problems. Stated return on repaid loan is just under 9% APR.
RealtyShares - 8 deals funded, one has paid off in less than 4 months, the others are all in full swing and expected to all be repaid by early summer. Stated return on the paid off note - 9% APR. It came in right at this, even though my funds were sitting in escrow for a month. RealtyShares paid out interest for that month. All notes pay interest and bonus interest on time. A couple of these aren't technically debt deals as they are preferred equity (or 2nd position) but they only pay fixed return. Two of them also have an equity kicker once the property is sold.
Fundrise - 1 deal funded and repaid. This was a 2nd position note and the borrower paid interest one time and paid the note back once everything was sold. 12% APR stated return, but actual cash return to me was closer to 10.5% since my cash was sitting in escrow for a month before fully closing.
Equity Deals:
RealCrowd - 1 deal funded through them, office property in DC, continues to pay but just slightly below expected first year return of 12%. Still have this quarter to go, but I expect we will come in at 11% cash on cash. Not going to cry home about this, as already the property has been improved and returns should do the same within a year.
RealtyShares - 1 deal funded, multi-property rehab fund, pay expected 8% cash on cash each month. It's new, so I don't expect to see increases until end of 1st quarter next year once they start selling off homes and equity share kicks in.
Fundrise - 1 deal funded, retail in Indianapolis. It too was estimated to pay 12% first year, but coming in at 10.5% right now. There was little to no improvement needed here -- this was NNN type of deal.
Portal Comments:
Patch of Land: excellent communication and fixing problems (every portal experiences bank transfer issues, etc.) I am told they are trying to implement a better system to keep investors updated on progress. For now, I just ask and usually they respond to my request within a day. They continue to bring good deals for the investor and very good rates -- most deals I see above 11% are snapped up within a few hours. Had an excellent conversation with their top underwriter and I feel he knows what he is doing.
RealtyShares: top notch portal. Excellent offerings and most of their deals fund very quickly too--even the larger equity deals. The have a nice system in place that updates investors on borrowers progress. With pictures! This is what we asked them for and they have it going now. They are by far the fastest at communication. Almost all my emails are responded to within the hour. Any questions we have for the borrower, they send along and usually get quick answers.
RealtyMogul: I haven't done anything new with them since late last year, mainly because their focus has been on equity and I have enough of that for now. The quality of their deals seem to be high still and they fund fairly quickly. Communication is good with them too, but of the two investments I did, I had to ask for updates. I imagine with all portals, their equity updates are standard every quarter.
Fundrise: I have also not funded anything new with them, as I am steering away from 2nd position. If I can get the same or better rates in 1st position then offerings of 2nd position don't interest me. Risk/Reward.
I think these above 4 portals stand out from the rest for the investor. Going to be interesting to see how they once again change with the market over 2015. I am looking forward to it. Investors are going to have more knowledge now and I think most are going towards to leaders of the pack.
Mostly, this post is to give an update of real world results of investments. It's only been a year and probably not long enough to judge adequately all the equity deals done, but it's a start.
Debt deals:
Patch of Land - 2 deals funded, both at or below 50% LTV, 12-13% APR. Both have paid monthly interest regularly. One deal was estimated to last only 6 months, but the borrower keeps changing his mind on whether to sell or refinance. Note term is 12 months, so borrower still has a little time to decide, so I cannot complain.
RealtyMogul - 2 deals funded, one was paid off in less than 6 months, the other matures at the end of this month (1 year term.) Interest paid regularly, no problems. Stated return on repaid loan is just under 9% APR.
RealtyShares - 8 deals funded, one has paid off in less than 4 months, the others are all in full swing and expected to all be repaid by early summer. Stated return on the paid off note - 9% APR. It came in right at this, even though my funds were sitting in escrow for a month. RealtyShares paid out interest for that month. All notes pay interest and bonus interest on time. A couple of these aren't technically debt deals as they are preferred equity (or 2nd position) but they only pay fixed return. Two of them also have an equity kicker once the property is sold.
Fundrise - 1 deal funded and repaid. This was a 2nd position note and the borrower paid interest one time and paid the note back once everything was sold. 12% APR stated return, but actual cash return to me was closer to 10.5% since my cash was sitting in escrow for a month before fully closing.
Equity Deals:
RealCrowd - 1 deal funded through them, office property in DC, continues to pay but just slightly below expected first year return of 12%. Still have this quarter to go, but I expect we will come in at 11% cash on cash. Not going to cry home about this, as already the property has been improved and returns should do the same within a year.
RealtyShares - 1 deal funded, multi-property rehab fund, pay expected 8% cash on cash each month. It's new, so I don't expect to see increases until end of 1st quarter next year once they start selling off homes and equity share kicks in.
Fundrise - 1 deal funded, retail in Indianapolis. It too was estimated to pay 12% first year, but coming in at 10.5% right now. There was little to no improvement needed here -- this was NNN type of deal.
Portal Comments:
Patch of Land: excellent communication and fixing problems (every portal experiences bank transfer issues, etc.) I am told they are trying to implement a better system to keep investors updated on progress. For now, I just ask and usually they respond to my request within a day. They continue to bring good deals for the investor and very good rates -- most deals I see above 11% are snapped up within a few hours. Had an excellent conversation with their top underwriter and I feel he knows what he is doing.
RealtyShares: top notch portal. Excellent offerings and most of their deals fund very quickly too--even the larger equity deals. The have a nice system in place that updates investors on borrowers progress. With pictures! This is what we asked them for and they have it going now. They are by far the fastest at communication. Almost all my emails are responded to within the hour. Any questions we have for the borrower, they send along and usually get quick answers.
RealtyMogul: I haven't done anything new with them since late last year, mainly because their focus has been on equity and I have enough of that for now. The quality of their deals seem to be high still and they fund fairly quickly. Communication is good with them too, but of the two investments I did, I had to ask for updates. I imagine with all portals, their equity updates are standard every quarter.
Fundrise: I have also not funded anything new with them, as I am steering away from 2nd position. If I can get the same or better rates in 1st position then offerings of 2nd position don't interest me. Risk/Reward.
I think these above 4 portals stand out from the rest for the investor. Going to be interesting to see how they once again change with the market over 2015. I am looking forward to it. Investors are going to have more knowledge now and I think most are going towards to leaders of the pack.
