In recent years, platforms like WealthFront and Betterment have revolutionized investing, bridging the gap between the general public and investment opportunities. Among these platforms are online portals for realty shares, offering diverse investment options to individuals. Let’s delve into RealtyShares 101 to understand what it entails, how to leverage it for investment, its benefits, and the steps involved in navigating various investment opportunities.
Understanding RealtyShares
RealtyShares is an online investment platform designed for real estate investments. Primarily targeting small businesses, such as single-family home flipping, RealtyShares enables individuals to invest in real estate projects by purchasing shares in virtual companies seeking investors.
Initially introduced by Betterment and later followed by Indiegogo, RealtyShares emerged in 2013 as a newcomer in the online investment landscape. Competitors in this field offer various property types, including residential, commercial, retail, and mixed-use properties.
Why Consider RealtyShares?
There are several compelling reasons to consider RealtyShares for investment. Whether aiming to save for early retirement, fund your children’s education, or generate passive income, this platform offers avenues to achieve diverse financial goals. RealtyShares recognizes the unique attributes of commercial assets, aiming to democratize access to this investment class.
According to a 2017 report by UBS and Campden Wealth Management, approximately 15% of investible shares are allocated to real estate. RealtyShares, spearheaded by individuals with extensive experience in finance and real estate, provides a straightforward avenue for investing in commercial real estate.
How RealtyShares Operate
To invest through RealtyShares, individuals must qualify as accredited investors. The platform reviews investment opportunities to ensure they meet the criteria for accredited investors. Once approved, investments are listed on the platform, accompanied by comprehensive financial and legal documentation outlining associated risks.
Investors have the flexibility to invest in either a portion or the entirety of a project. RealtyShares maintains a transparent record of investment history and provides tax information to investors. Investment options include equity fund investments and real estate investments, primarily focusing on commercial properties.
Investing with RealtyShares: A Five-Step Process
Investing through RealtyShares involves a straightforward process:
- Sign up for RealtyShares account
- Wait for the SEC’s 30-day cooling period
- Explore various real estate investment opportunities
- Select and finalize investment package
- Monitor and manage investments through the online platform
Project Selection Criteria
RealtyShares employs stringent criteria for project selection, with only 5% of investment applications accepted. The selection process involves:
- Application Submission: Applicants undergo scrutiny based on past track records, financial standing, and expertise.
- Due Diligence: RealtyShares conducts thorough due diligence, assessing investment packages, financial viability, property legality, condition, and location.
- Transparent Approval Process: Approved projects are listed on the official RealtyShares website for user accessibility.
Investment Options: Debt vs. Equity
Investors qualifying with RealtyShares can choose between two investment options:
- Debt Investment: Investors act as lenders, providing loans for projects, with returns based on interest charges. Typically, these investments last for 12 months.
- Equity Investment: Investors gain ownership stakes, allowing participation in project cash flow and property sales. These investments have longer durations, lasting 3-5 years.
Benefits of RealtyShares
RealtyShares offers numerous benefits, including:
- Passive Income Generation: Investors can enjoy a stream of passive income.
- Diverse Investment Choices: The platform provides a range of investment options catering to various preferences.
- Tax Advantages: Real estate investments can offer tax benefits through mortgage interest and depreciation.
Is RealtyShares Right for You?
If you meet the criteria to be an accredited investor and seek to diversify your investment portfolio with real estate assets, RealtyShares could be an excellent opportunity. It eliminates the hurdles associated with traditional real estate investment, offering accessible avenues for individuals to participate in the real estate market.
Investing in real estate can be a rewarding endeavor, and with platforms like RealtyShares, the process becomes more streamlined and accessible to a broader audience.