With some services we recommend, vetting/due diligence is relatively easy because of the nature of the business. Insurance might be the prime example, but I also include student loan refinancing, mortgages, and even financial advisors in that list. The services take place relatively rapidly and many readers use each of those services in any given month. Due to the long-term nature of real estate investments, this process is dramatically more difficult, so I consider our real estate company list more of an “introduction list” than a “recommended list.” I have invested myself with many of these companies, but usually only with a single deal or two over a few years. Just finding their name on this site doesn’t excuse you from having to do your own due diligence. In 2019, we began requiring companies listed here to submit an application. Please read them before investing as they contain questions and answers that I think you should ask/know prior to investing.
The page is divided into five different categories–
- Private real estate funds,
- Real estate platforms,
- Real Estate Investment Trusts, and
- Turnkey Real Estate Companies.
Although many companies don’t fit easily into a single category, I’ve tried to place them where I feel they best fit. In case it isn’t crystal clear, I have a business relationship (either flat fee ads or an affiliate relationship) with each of these companies.
If you are a real estate company interested in advertising with The White Coat Investor, please fill out the application below and submit by email to Cindy (at) whitecoatinvestor.com.
Private Real Estate Funds
One of my favorite ways to invest, a private fund provides a great deal of professional expertise in selecting and managing investments and ready diversification between deals. While equity funds are usually quite illiquid, some of the debt funds do provide significant liquidity after a year. Minimum investments generally range from $50,000 to $1 Million per fund.
One subset of this category is what I call an access fund provider. In exchange for an additional level of fees, this type of platform helps you choose a fund, reduces the cost of entry to the fund (often to something like $25,000), and may even provide other special incentives for investors going through the platform such as a reduced fund fee.
CityVest is the first real estate investing platform to offer exclusive trade marked “Access Funds” allowing individual investors such as doctors to invest in the highest quality, top-performing institutional real estate private equity funds. These funds often have minimum investments ranging from $200K to $1M, but CityVest pools investor capital into an “Access Fund” with a much lower minimum investment, often just $25,000.
CityVest offers its investors a diverse selection of Access Funds including debt funds, multi-family properties, student housing, self-storage, medical properties, office, retail, industrial and mobile home parks. Each fund has a diversified pool of assets, extensive investment management expertise, and targets large assets where investment returns are highest. There are four significant benefits to CityVest’s Access Funds:
- Institutional Quality. CityVest’s investors obtain unique access to multi-hundred million dollar institutional investment funds that invest in large, quality real estate assets that may generate higher investment returns than small riskier single asset and small sponsor deals,
- Low Minimum Investment. CityVest’s investors can invest as little as $25,000, in order to access the underlying fund which usually requires a minimum investment of $200,000 to $1 million,
- Better Investment Terms. CityVest is able to negotiate improved investment terms from the underlying fund due to the fact that CityVest aggregates many investors (like an insurance buying group). Since CityVest’s Access Fund might be at an aggregate investment amount approaching $5 million, the underlying fund may reduce fees or give better terms, partially offsetting the CityVest fees,
- Audited Track Record. CityVest has a rigorous due diligence and selection process for each fund, which requires the fund to have a proven, audited track record. In addition, CityVest utilizes a third party administrator to mange its accounting, taxes and distributions.
Two current deals right now:
First, the DLP Access Fund II, which invests in the DLP Income and Growth Fund, a debt fund that primarily loans short term money to house flippers and developers. Targeted return in the 9% range after-fees. If you invest through WCI links your minimum investment is $25K rather than the $250K the fund requires you get half off the CityVest management fee for the first year. More information can be found in this post.
Second, the Medical Properties Access Fund, which invests in the New Era Medical Investment Fund II, an equity fund that primarily invests in a value-add and development strategy in medical properties in Texas, Mississippi, Louisiana, and Indiana. Fund managers boast past performance of 34%+ and expect an IRR to investors in this fund of 18-20%. The value proposition for the access fund is a higher preferred return (15% instead of 8%), a lower promote (80/20 instead of 70/30). If you go through this link, your minimum investment is only $25K and half of your first year annual CityVest fee is waived.
Clairmont puts together the only “Co-GP” funds that I know about. Clairmont Capital Group is a Los Angeles-based real estate private equity firm, specializing in General Partner (“GP”) equity co-investments alongside best-in-class commercial real estate operators, developers and institutional capital partners in major U.S. markets. Basically, they provide some of the capital the GP is expected to bring in exchange for getting the extra return from the promote on that capital. So for their investors, it’s the best of both worlds–the higher return available to the GP without the hassle of being the GP. I wrote a blog post about this type of investment here.
They are raising capital for two funds right now. The first is “Fund III”, which is a broadly diversified Co-GP fund that invests primarily in development and value-add acquisition strategies across four asset classes: Senior Housing, Student Housing, Industrial/Logistics, and Workforce Housing. It is a 6-8 year fund with a $100K+ minimum, an 8% preferred return, a 2% annual fee plus an 80/20 split above the preferred return). 75% of the capital has already been raised and 33% already deployed, giving you visibility into what you will be invested in.
The second fund is a “Fund of Funds” with a lower minimum (just $25K) that invests 40% into Fund III and 60% into 5 already identified “sidecar deals” in student housing and senior housing. It actually has lower fees than Fund III and is filling rapidly.
Real estate platform Alpha Investing is now starting a fund expected to close in 2020 Q1. It will be investing in 10-12 equity deals similar to those already on its platform, mostly multi-family, student housing, and senior housing in multiple states. Minimum investment is $50K and fees are quite low compared to other funds (2% origination, 0.5% a year, and then an 80/20 promote ONLY on returns above the 10% preferred return). Although capital is called all at once, it will earn 4% until deployed. I’ll be investing in this fund.
37th Parallel has been doing multi-family syndications for years and is now opening its first fund. This $20-40M fund has a $100K minimum. It will have a value-add strategy targeting 100-450 door Class A- to C+ apartment complexes in 12 markets across Texas, North Carolina, South Carolina, and Georgia. They will be calling capital over 42 months and the fund will last up to 10 years. Fee/waterfall structure includes an 8% preferred return and an 80/20 split after that. Track record shows an average gross IRR of 18.84%. I have personally invested with 37th Parallel in the past, will be investing in this fund, and have negotiated a $500 fee discount for you if you go through this link. If you prefer individually choosing which properties you invest in, they will still be doing individual syndications too.
Real Estate Syndicators/Developers
Syndicated real estate is popular among white coat investors because it provides economies of scale a single investor cannot get and allows investment into large properties (such as apartment complexes) a single investor cannot afford. By banding together with up to 98 other investors, you get a lot of the benefits of direct ownership with little hassle.
This New York based development company combines developers, architects, construction managers, deal originators, and private investors to build, lease-up, and sell new buildings. With an 18 year track record of having never lost investor money while providing an IRR to investors of 18.7%, there is potential for a real boost to your portfolio.
They are currently raising money for North Park Lofts, a $43 Million, 3 year ground-up project for a 47,000 square foot building that will contain 36 residential units and 4 retail units. Their pro-forma is projecting a 25% IRR to investors. I’ll be helping them do a webinar about this deal on February 13th at 4 pm Eastern. RSVP here (even if you can’t watch it live because I believe it will be recorded.) If you would like to learn more:
Sign-up with Mortar Capital Management today! (increased preferred return on the project from 12% to 13% when using this link)
While they are starting their first fund (see above), they are going to continue offering value-add, multi-family investments a la carte. You’ll appreciate their long track record and conservative strategy. (They’ve never had a losing investment.)
Real Estate Platforms
These companies are most commonly thought of as online crowdfunders that connect real estate syndicators/developers with investors. Although you still usually need to be an accredited investor, minimum investments are generally lower than going directly to the syndicators.
This is a unique platform that I reviewed here. WCI Network partner Passive Income MD and I are advisors to the company. Volume is relatively low here due to the extensive vetting they do as a result of their unique fee structure and they’re really looking for long term relationships with both their investors and developers so expect a more personalized experience than most other platforms.
Alpha Investing is also now starting a real estate fund with an anticipated close in Q1 of 2020. It will invest in 10-12 investments similar to those previously on its platform (multi-family, student housing, senior housing).
Invest with Alpha Investing today! ($100 off your origination fee for your first investment when using this link)
Offers equity and debt investments to accredited investors
My favorite two things about Equity Multiple are their transparency and the fact that they invest alongside their investors on every deal. Since they have skin in the game, I expect them to be a little more conservative with their due diligence. Their volume is not as high as some companies, but perhaps that is a reflection of higher quality of the deals that do show up. Minimum investments are typically $5-10K.
I have one current investment with EquityMultiple.
Invest today with EquityMultiple! (Management fee waived on your first investment when using this link)
Offers mostly equity, some debt investments, and funds to accredited investors
Crowdstreet is one of the highest volume platforms and is highly-ranked by those “in the know.” They offer a wide variety of types of investments. They charge fees to the sponsor/syndicator rather than the investor. Crowdstreet also allows you to interact directly with the sponsor rather than having to go through them. They provide a free 176-page ebook to teach you about real estate investing. Minimums tend to be a little higher than with most platforms ($10-50K).
I have no current or prior investments with CrowdStreet.
Private Real Estate Investment Trusts (REITs)
Many investors know about REITs from their publicly traded cousins available in an investment such as the Vanguard REIT Index Fund. REITS have a unique legal structure that requires them to pay out essentially all of their profits each year to investors. Although somewhat comparable to funds, REITs have different tax treatment (benefit from the 199A deduction but don’t have depreciation passed through to investors) and generally have more liquidity and lower investment minimums. You may not even have to be an accredited investor to invest in these.
Offers equity and debt investments to accredited investors and REITs to non-accredited investors
I have been partnering with RealtyMogul for years, having met their CEO back in 2013, and have been investing with them for nearly as long. At one point they had pretty good volume for accredited investor investments, but seem to have shifted their focus toward the non-accredited market. Platform fees are average to slightly higher than average. Minimums can be a little on the high side for the individual deals (but are very low for the REITs).
I have one current investment through RealtyMogul, which has had a few issues but is almost back up to proforma.
Offers REITs and funds to non-accredited investors
Fundrise has completely transitioned over to a REIT/fund structure offered to non-accredited investors, although the one investment I’ve had with them was prior to this transition (and in fact, the asset was sold to one of the REITs!). They now have seven REITs/Funds with various focuses, including income, growth, and various geographic areas. Minimums are the lowest I’ve seen, just $500.
I have one past investment (preferred equity) through Fundrise, which performed exactly as expected.
Turnkey Real Estate Companies
When you go through a turnkey real estate company, you own the real estate directly and singly. You get all the benefits (depreciation, control, profits) and all of the downsides (risk, lack of diversification, illiquidity). However, the company builds (or fixes up) the property and puts a tenant in it before selling it to you. They then manage the property and often even sell it for you when you’re read to be done. While there are fees for this service, it is a great way to reduce the hassle of direct ownership, especially in locations away from your local area.
Marketplace for buying and selling single-family rental homes, enabling investors to acquire income-producing real estate in 40 markets across the country. Roofstock is a great solution for owners who want the benefits of direct ownership and want to have more control over their investment – you are buying the home directly and own it outright, with traditional home loan financing options available for most investors. Their team is available to guide you through the entire process from exploring the marketplace all the way through closing, and they also provide a 30-day money-back guarantee on every home.
What do you think? Have you invested in crowdfunded real estate? Which companies have you used? What did you like or dislike about them? Comment below!