- What is Sharestates?
- How does Sharestates work?
- How much does Sharestates cost?
- Sharestates features
- Who is Sharestates best for?
- Who shouldn’t use Sharestates?
- Pros & cons
- Sharestates vs. competitors
- The Bottom Line
What is Sharestates?
How does Sharestates work?
How much does Sharestates cost?
Borrower debt payment dependent notes
Low delinquency rate
Who is Sharestates best for?
- Someone who wants to diversify their portfolio. At some point in life, you’ve been told not to put all of your eggs in one basket. But financial gurus also preach that you shouldn't invest in something you don’t understand. Sharestates is a way to dip your toe into real estate without the learning curve of buying a property to flip or rent.
- Someone who wants to get into real estate without breaking a sweat. Those who find real estate a fascinating area to invest in but don’t want to pull up carpets and install new toilets, investing in Sharestates gives you access to real estate but without all the manual labor.
- Someone who doesn’t have a lot of cash to put towards real estate. Even though Shrarestaes is only open to accredited investors, it doesn't mean you have piles of cash just waiting to invest. Maybe you do have six-figure incomes, but you’re putting your three kids through college and are limited. Perhaps your other assets produce a steady but small cash flow that you want to invest into something slightly more liquid than an apartment complex. Investing in crowdfunded real estate is something to look into.
Who shouldn’t use Sharestates?
- Those who are already doing their own real estate deals. If you’re deep in the real estate trenches, calling sellers, writing offers, and closing deals, then the investment side of Sharestates might not be what you’re looking for. That said, if you’re looking for more funding, you can apply to be a borrower and receive financing from Sharestates investors.
- Those who prefer a more hands-off approach. It’s far easier to invest in Sharestates than to buy a rental property, but for the best results, it’s not as easy as putting your account on auto-draft and taking a set-it-and-forget-it approach. Transparency is a core value with Sharestates, and you’re encouraged to look at the data on the deals available. You’ll also be sent updates throughout the duration of the loan.
Pros & cons
- It is run by people who know real estate. The founders, and many of the management, have a considerable amount of real estate investing experience, which has led them to structure the platform in ways that have gained investors’ trust and limiting their liability. More than 82% of investors are repeat investors.
- Comprehensive due diligence is performed. While the underwriting process may be daunting to a sponsor (borrower), it ensures the delinquency rate stays very low.
- Low minimum investment. The minimum investment of $5,000 (previously it was only $1,000) is reasonable and maybe even low depending on comparable investment options.
- Option to liquidate. It’s not ideal, but if at any time you do need out of a deal, you can apply to have your position liquidated for a discount.
- You have to be an accredited investor. Possibly the biggest downside is that you have to be a high-income earner ($200,000 a year, or $300,000 for couples) or have a large net worth ($1 million in assets not including your residence). Due to SEC regulations, there’s no way around this.
- A limited selection of investments. Unlike investing in stocks or mutual funds, which you can always buy more shares of, there may be times when there are a limited number of projects to invest in on the platform.
- No secondary market. Since this is restricted security, you should expect to hold them until the loan comes due unless you sell your shares at a discount. Fortunately, most loans are for 12 months, meaning that your money won't be tied up for long.
Sharestates vs. competitors
|Crowdfunding platform||Investment minimum||Fees||Open to non-accredited investors|
|Sharestates||$5,000||Set up fee 0%-2%||No|
|Realty Mogul||$5,000||Annual fee 1%-1.5%||Yes|
The Bottom Line
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