RealtyShares boasts solid returns on real estate investments

Investors get a return after two years of investing in real estate property on RealtyShares

Financial trends and news by Bambi Francisco Roizen
October 2, 2015
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The boom in the real estate market is helping real estate crowdfunding sites gain credibility. Two-year-old RealtyShares, a real estate crowdfunding platform that connects property borrowers with lenders or equity investors, has crossed a return-on-investment milestone.

The San Francisco-based startup says it's returned over $10 million in "investor contributions." In other words, $10 million that's been invested on its platform has been given back, plus a return. "Returns vary depending on the deal and nothing's ever guaranteed, but our debt investments generally feature interest rates in the 8-12% range, while returns on equity investments can be substantially higher," said Nav Athwal, Founder and CEO of RealtyShares.

The returns came from 20 different developers who placed the investment into properties across California, Florida, New Jersey, Alabama, Illinois, Washington, Ohio, Oregon, Nevada and Louisianna. 

All told, there were hundreds of investors in these investments, with an average investment of $5k across the properties, said Athwal.

To date, there are 10,000 accredited investors on the platform who've invested $100 million in1500 properties across more than 200 separate investments. Investors have the option of taking equity in a property or making a loan, much like Lending Club, a service that connects borrowers and lenders. The mix is about half and half, said Athwal.

For the commercial real estate deals, investors typically take an equity share. For residential deals, where owners or developers are remodeling and need a short-term loan for six months to a year, the lending rates are 8% to 11%, said Athwal. Why would any borrower pay those rates?, I asked. 

"Banks don't provide the financing we provide," said Athwal. "We focus on properties that need to be rehabilitated. They can't get loans for six to 12 months." 

So how do you know what's a good investment?

RealtyShares curates all its listings. Many times the properties are listed because of the developer or borrower's track record. In fact, many investment decisions are made by going in on deals selected by borrowers with proven track records. "By nature of our selection process, we want to see past success," Athwal explained. To that end, "we don't work with first-time real estate investors."