Streitwise Review – Low-Cost Real Estate Investing
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Fast Facts
Purpose:
Offers REIT investments
Minimum investment amount:
$1,000
Annual management fee:
2%
Investment horizon:
Long-term; at least 5 years
Ideal for:
Passive income investors
Open for:
Accredited and non-accredited investors
Investing in real estate for passive income was only available to the rich or to anyone who could come up with enough money to buy some property.
That’s changed with real estate investment trusts. REITs are used by companies that own or finance many types of real estate that provide passive income for individual investors. Holdings include commercial real estate, such as office buildings, hotels, and shopping centers, and private real estate, such as condominiums.
Streitwise is a private REIT that allows an initial investment of $1,000.
In this article
What is Streitwise?
Streitwise allows everyday investors to create a diversified portfolio by buying shares of a REIT owned by Streitwise and its owners. Some crowdfunding real estate platforms allow owners to buy shares of individual properties, but Streitwise provides shares of its REIT. Investors don’t have to own the properties themselves to benefit.
The company was founded in 2017 and is headquartered in Los Angeles. Its REIT is managed by Tryperion Partners, a real estate company with more than 40 years of real estate investing experience.
Unlike real estate crowdfunding platforms that allow thousands of investors to contribute to a real estate deal and get a prorated investment return through publicly traded REITs, Streitwise is a non-traded REIT open to accredited and non-accredited investors.
Most REITs focus on buying properties and then improving and reselling them. Streitwise takes a different route of buying properties in prime market areas and owning them for the long term to generate rental income from businesses leasing the building.
Investors make money through annualized dividends that have a target of 5-6%. Dividends are paid quarterly. Investors can also profit if a holding is sold. They can also sell their shares after one year, when a fee is assessed, giving them a net asset value of 90% to 97.5%. No fees are charged if shares are sold after five years.
If you’re looking to diversify your portfolio and want to own shares in a large range of properties through a REIT, then Streitwise may be for you.
- In under 3 minutes, start investing spare change, saving for retirement, earning more, spending smarter, and more.
- Make your first successful Recurring Investment (min $5) - get your $20 bonus within 10 days of following month
- Over 13M All-Time Customers
- Over $22B Invested
How does Streitwise work?
Setting up an investment account at Stretwise is easy. Start by clicking the “Start Investing'' or “Invest Today” buttons on the home page or many other places throughout the website.
You’re then taken to the Streitwise Investor Dashboard to create an account.
Once your identity is verified, Streitwise asks for your initial investment amount, which must be at least $1,000. You then provide your investor details. You can also download its quarterly report and other documents, and can read about its investment strategy and how Streitwise works. A mobile app is also available to buy shares and learn about the company.
How much does Streitwise cost?
The fee structure at Streitwise is simple. Its annual management fee is 2%.
An investor doesn’t lose 2% of their investment annually as a result of this fee, according to the company. The fee is typically taken out of the dividend payment.
We couldn’t find any hidden fees in any of the fine print on its website. The only other fees we found were for selling shares before five years, which lowers the price of shares by 2.5% to 10%.
Streitwise features
Quarterly dividends
Dividends aren’t unusual for real estate investing platforms, but Streitwise says it pays some of the highest dividends around, with an average 8.3% dividend return over 29 quarters. That compares to a 2.82% average for public REITs, and 1.96%for public bonds, according to Streitwise.
Streitwise has a current return target of 5-6%.
Open to non-accredited investors
Streitwise’s REIT is a private fund that isn’t publicly traded, as many REITs are. Many private REITs are only available to accredited investors with high incomes and net worth. Streitwise allows accredited investors, but also non-accredited investors.
Both types of investors must provide and confirm income and net-worth information before investing, in part because there’s a limit on how much individual investors can invest. For non-accredited investors, a total investment must be less than 10% of your net worth, excluding your home, and less than 10% of your annual income.
An accredited investor is an investor with a special status under financial regulation laws. They’re usually high-net-worth individuals with at least $1 million who have access to higher risk investments. Their annual income must be at least $200,000 for each of the past two years, or $300,000 combined income if married.
Some types of financial offerings can only be made to accredited investors.
No volatility from stock market
Because its REIT isn’t traded on the stock market, the Streitwise REIT isn’t directly subjected to the volatility of the stock market, the company says. “This can be advantageous during periods of market instability and may offer a more predictable stream of income,” it says.
There are risks, of course, as there are with any investment, and there’s no guarantee of a return of principal or of any return at all. “The real estate market is cyclical and it is difficult to know how and when the market will change,” the company says.
Possibly to help allay some of these fears, Streitwise has a large amount of skin in the game as an indication of its confidence in its investments. Its three founding partners own 500,000 shares valued at more than $5 million, compared to $540,000 invested by the average fund manager elsewhere.
Long-term focus
Streitwise focuses on buying commercial and residential real estate and owning properties for the long term. It still provides liquidity and you can sell shares at any time, but you’ll pay a fee if you sell them before five years.
Streitwise looks for deals in secondary markets where the economy is doing well. It aims to have a steady cash flow by having tenants in long-term leases in the properties it owns close to transportation, nearby amenities, and established employees.
In-house management
Some real estate investing platforms pay third parties to manage their investment properties. Streitwise’s real estate investment trust provides property management in house and doesn’t work with third parties.
- In under 3 minutes, start investing spare change, saving for retirement, earning more, spending smarter, and more.
- Make your first successful Recurring Investment (min $5) - get your $20 bonus within 10 days of following month
- Over 13M All-Time Customers
- Over $22B Invested
Who is Streitwise best for?
Long-term investors
REITs recommend that investors keep their money in a fund for at least five years. You may benefit from high quarterly dividends and higher per share prices over the long-term, though like any investment, the value could drop over that time.
Looking for diversification
Almost any REIT will add diversification to your investment portfolio, but Streitwise does it with relatively low fees and an initial investment that isn’t too high. A diversified portfolio can include real estate, and Streitwise does that by focusing on commercial properties for the long haul.
Non-accredited investors
Investors who aren’t wealthy but still have some money to invest and are considered non-accredited investors can invest in Streitwise. It’s one of the rare REITs that allows almost anyone to invest in its private fund, instead of just to institutional investors or accredited investors with a high net worth.
Add to retirement accounts
Streitwise works with self-directed IRAs, also called SDIRAs, to invest in real estate through retirement accounts. Some 401(k) retirement plans can be rolled over into a self-directed IRA.
Who shouldn’t use Streitwise?
Investors seeking rise in share price and dividend
The initial investment required to invest in Streitwise has dropped from $5,000 at its inception to $1,000 because its net asset value, or NAV, per share has dropped. This isn’t good news if you’re looking to sell your shares.
One share cost $10.09 on Dec. 31, 2020, but dropped to $7.14 on March 31, 2024.
The quarterly dividend has also dropped, from 21 cents from July 2022, to 13 cents in July 2024.
You can’t afford the minimum investment
As of the second quarter of 2024, the minimum investment for the Streitwise REIT is $1,000. That cost can go up or down, depending on the per share price when you invest. Earlier it was around $3,500 as an initial investment, if you think it is too high, you might want to look for other options.
Short-term investors
REITs are meant to be held for the long term, preferably for five years or longer. Some real estate properties can take years to be profitable, and could take longer than five years to generate a rate of return. If you can’t commit to a long-term investment, then a REIT may not be for you.
Pros and cons
Pros
- Modest minimum investment of $1,000.
- Non-accredited investors can join this private REIT.
- Dividends are paid quarterly.
- Passive income.
- Can diversify a portfolio with real estate.
- Annual fee is taken out of dividend payment, not an overall investment.
Cons
- Long-term investment of 5 years is recommended.
- Share price and dividend have dropped annually except for the past two quarters.
- High fees for early share redemption.
Streitwise vs Fundrise vs RealtyMogul
Platform | Open to non-accredited investors | Investment minimum | Fees | Private REIT |
|---|---|---|---|---|
Streitwise | Yes | $1,000 | 2% | Yes |
Fundrise | Yes | $10 | 1% | Yes |
RealtyMogul | Yes | $5,000 | 1-1.25% | Yes |
Fundrise
The real estate investing platform Fundrise offers one of the lowest minimum investments around, at only $10. It also has low annual fees of 1%. Like Streitwise, it’s also offered to accredited and non-accredited investors.
Money you put into Fundrise is automatically invested in a portfolio mix of commercial, equity and debt, and industrial projects.
RealtyMogul
RealtyMogul has a high minimum investment of $5,000, though its annual fees are low at 1-1.25%.
RealtyMogul gives you more control by allowing you to choose individual properties to invest in. Several of its REITs are available to non-accredited investors.
- In under 3 minutes, start investing spare change, saving for retirement, earning more, spending smarter, and more.
- Make your first successful Recurring Investment (min $5) - get your $20 bonus within 10 days of following month
- Over 13M All-Time Customers
- Over $22B Invested
FAQs
What is a REIT?
A Real Estate Investment Trust, or REIT, is a tax-advantaged company that owns income-producing properties and distributes it to investors through dividends. At least 90% of its annual ordinary taxable income is paid as dividends to investors.
How is share price and NAV determined?
The initial investment required by Streitwise can change every fiscal quarter, and is set at $1,000. If you hold on to your shares for years, the goal is for the share price to increase. You could then sell your shares for a profit, or keep receiving the quarterly dividend. The per share price is adjusted every fiscal quarter: Jan. 1, April 1, July 1, and Oct. 1. It will equal the company’s net asset value, or NAV, divided by the number of shares of common stock outstanding. This information is provided to the Securities and Exchange Commission before each quarter, and is available on the Streitwise website.
What are the tax advantages of investing in REITs?
REIT investors can deduct up to 20% of their dividends. Certain dividends can be reclassified from “ordinary income” to “return of capital.” Also, REITs aren’t taxed at the corporate level, avoiding the double taxation of corporate tax and personal income tax. When properties are sold, investors benefit from lower long-term capital gains tax rates.
How do I receive the annual dividend?
The annual dividend is paid through quarterly dividends that can be sent to you by physical check or transferred directly into your bank account. They can also be reinvested through the company’s dividend reinvestment plan.
The bottom line
The REIT offered by Streitwise isn’t full of real estate groups investing in the best properties that you’re locked out of. This real estate investment company raises money from individual investors so it can buy and manage properties internally.
It pays quarterly dividends and seeks annualized returns of 5-6%. A high dividend of 8% or so was paid regularly before 2020.
Downsides include the recommended holding time of five years, though that’s not necessary to become an investor, and there’s a chance of depreciation in real estate in general.
For individuals looking for diversification of their investment portfolio, Streitwise can be a smart way to invest in real estate without needing accreditation, an extremely high income, or thousands of dollars to get started.
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Writer
Aaron Crowe is a freelance journalist who specializes in personal finance writing and editing. He has worked at newspapers, where he won a Pulitzer Prize, and has written for numerous online publications. These include AOL, US News & World Report, WiseBread, Bankrate, AARP, and many websites focusing on housing, credit and insurance. He lives in California with his wife and daughter.
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