Crowdfunded real estate like Crowdstreet,YieldStreet

I’ve been in commercial real estate banking 20+ years. Hard pass for me. I used to think these were going to be ok. Let the normal joe invest into bigger deals etc etc. Kind of cool, decent returns etc.

The issue with these guys is what’s coming out now with the crowdstreet and nightingale deal. Very little to no oversight. People’s money literally went straight to the borrower before they even bought the property vs going into an escrow somewhere. How many of these other platforms operated this recklessly? Unfortunately you never truly know until the crap hits the fan.

None of these platform have been around during a downturn so it’s going to be interesting to see how they handle everything with stuff faltering and/or investors wanting to pull their capital out of deals.

I personally would rather find a local group raising funds where you at least know one of the partners doing the deal, know the real estate etc etc. We put groups of limited partners/investors together from time to time as we find decent deals. Happy to add you or anyone to the distribution list for new deals if you like. Lnobles@redstickag.com

I'm in Fundrise, which I think more or less started the segment. I was worried early on because much of their investment was in CA. However, they quickly got outside of CA and invested heavily in growth states like Tx and the SE. They were also ahead of the curve in apartment/condo developments as the housing supply tightened, and they correctly saw the glut of commercial office space coming, choosing instead to focus on warehouse and flex space.

Another interesting aspect of Fundrise comes when you dig into the structure of the entity. They are not one large company. Instead, every single investment vertical (income producers, growth, risk, etc) is a separate LLC under the parent company. This should limit fallout on the overall company if one sector goes sideways. IIRC they have something like 8 LLCs, perhaps more. Been several months since I dug into it.

I have also found their letters to shareholders to be informative and useful, FWIW. Less rah rah and dry figures that are hard to get to the bottom of and more insight into the market and strategic discussions.

Now, having said all of that, returns have not been great this past year (expected, with the state of RE) and I am not enamored with their expansion into tech investing, but so long as that remains compartmentalized in a separate LLC, if they want to risk their $, that's on them!

Overall, I have about 5% of my portfolio in it. My annualized return since 2021 is 6.9%.