As the real estate market continues to show signs of life, top online real estate investment companies are positioned to offer investors a variety of investing opportunities. Deciding on which opportunity to take can make all the difference in the returns.
In February of 2020, the DOW Jones Real Estate Index was at a 10-year high. Then the COVID pandemic hit, the country went on lock down and real estate development, both residential and commercial came to a screeching halt. The February high of $394 crashed to $226, the lowest it had been in nearly a decade.
https://www.spglobal.com/spdji/en/indices/equity/dow-jones-us-real-estate-index/#overview
Since then, the real estate market gained some ground and then puttered along around $300 for most of the year. Lately, signs of life have started to show a potential come back with the latest quarter gaining 5% and latest month showing gains of 8%.
On top of gains in the Dow Jones Real Estate index, the National Association of Home Builders Housing Market Index (HMI) is now showing record level consumer and builder confidence
Quite often, consumer sentiment is a leading indicator that a market is positioned to show tremendous growth.
So, as the real estate market continues to pick up steam, the question isn’t whether you should invest in the real estate market but rather, how should you invest in the real estate market?
In the past five years or so, new real estate investment companies have emerged and created new pathways for investors to diversify their portfolios through real estate investing. Consumers looking for both active and real estate options now of an assortment of opportunity through new online real estate investment apps.
It’s crucial for any potential investor to do their due diligence when selecting their real estate investment company of choice. The good news is that there is a vast amount of real estate investing options to choose from and plenty of research available to make an informed decision.
For active real estate investors still looking to invest in flipping houses or rental properties but find their mobility hampered by the quarantine, there are options available. For those seeking passive income from their real estate investments but want different options than REIT’s or real estate ETF’s, there are options available.
Below we take a look at three very different real estate investment options, how they make their investors money, and some of the pros and cons of each.
Launched in 2015, Roofstock.com is a rental property marketplace where investors can sort through rental properties in over 70 markets and can buy and sell single-family rental properties. Different than some crowdfunded real estate applications, investors buy the entire property and then rent it out for monthly income.
You don’t need to be an accredited investor to purchase a rental home through Roofstock and its large marketplace provides active real estate investors new reach and accessibility they typically wouldn’t have with the traditional rental property approach which is typically limited the area the investor lives in.
| Roofstock.com | Pros |
| Low Fees | X |
| Non-Accredited Investing | X |
| Property Managers Available | X |
| Roofstock.com | Cons |
| Large Down Payment | X |
| You are now a new Landlord (a lot of work) | X |
| Heavy Initial Research | X |
YieldStreet is more than just real estate. They provide a variety of alternative investment opportunities. However, since you are here to learn about real estate investing, we’ll focus on just that.
YieldStreet is a crowdfunded lending platform that features short-term debt offerings that are secured by commercial or multifamily real estate. Unfortunately, the platform is only open to accredited investors which means that you must earn at least $200,000 per year or have a net worth of $1million or more.
As an investor, you have accessibility to primarily debt or equity in commercial real estate deals which could provide lucrative in a growing market.
| YieldStreet | Pros |
| Low Min Investment | X |
| Low Fees | X |
| Diversity of Assets | X |
| YieldStreet | Cons |
| Accredited Investors Only | X |
| Small Amount of Real Estate Deals | X |
| Complaints about Customer Service | X |
Launched in 2014, PeerStreet is a real estate crowdfunding marketplace that allows investors to become peer-to-peer lenders and invest in real estate loans. This means that the investor invests in the loans made to real estate borrowers and as they pack back their loans, the investor makes money. The investments are all in debt so there is no equity backed opportunities.
PeerStreet isn’t the first peer-to-peer lending platform but as opposed to some loan platforms, PeerStreet is backed by an actual asset in real estate.
| PeerStreet | Pros |
| Large Amount of Deals | X |
| Diversification of deals | X |
| Great Performance Track Record | X |
| PeerStreet | Cons |
| Debt Investments Only | X |
| Accredited Investors Only | X |
| Heavy Initial Research | X |
As you are aware, these real estate investment companies are just a few of the many options real estate investors have today. Investing in real estate is becoming seamless and efficient. However, with the different strategies available, investors must continue to do their research and due diligence before selecting their option.
Happy Investing!
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