Business

Is Real Estate Crowdfunding Worth It?

Published

1 year ago

August 26, 2023

Real estate crowdfunding has become an increasingly popular way for investors to get involved in real estate deals that were previously only accessible to wealthy individuals or institutional investors. Through real estate crowdfunding platforms, investors can pool their money with others to invest in commercial or residential properties for a share of the rental income, profits from a sale, etc. While real estate crowdfunding offers exciting opportunities, it’s understandable that investors have questions about whether it’s really worth it. There are pros and cons to evaluate when deciding if real estate crowdfunding aligns with your investment goals and risk tolerance.

Lower Investment Minimums Open Access

One of the biggest benefits of real estate crowdfunding is that the investment minimums are much lower than what you would need to invest on your own. Whereas investing in physical real estate properties often requires tens or hundreds of thousands of dollars, real estate crowdfunding deals can have minimums from $500 to $10,000. This allows investors who don’t have tons of capital to diversify into real estate. Rather than saving up for years to buy one rental property, you could invest small amounts into multiple properties now. Real estate crowdfunding democratizes access to deals that were previously only available to the wealthy.

Portfolio Diversification

In addition to lower minimum investments, real estate crowdfunding makes it simpler to build a diversified real estate portfolio. Choosing which properties to purchase on your own requires extensive research to select assets in different markets, with different strategies (residential vs. commercial), and in different parts of the real estate cycle. With crowdfunding, you can browse pre-vetted deals online and invest in a range of real estate projects to mitigate risk. Geographic diversification is easier through national and global crowdfunding platforms. Balancing residential, commercial, retail, and other types of real estate projects lets you diversify across sectors.

Passive Income Potential

Many investors are attracted to real estate crowdfunding for passive income opportunities. Rather than taking on the responsibilities of being a landlord, you can earn income from properties you invest in through a crowdfunding platform without having to do the hands-on work. Top real estate crowdfunding platforms handle property management, leasing, maintenance, legal compliance, rent collection, and more. You get the benefits of income generation without the day-to-day management burden. Real estate investments can produce steady cash flow month-over-month or via annual dividend payments.

Professional Vetting

Leading real estate crowdfunding platforms have teams of experienced professionals who vet each deal before listing it for everyday investors. They conduct due diligence to assess risks, validate business plans, evaluate sponsors/developers, audit financials, look at comparable deals, etc. This expert pre-screening gives investors more confidence. You can lean on the knowledge of these teams who assess potential investments full-time rather than figuring it all out solo as an individual investor. Their strict listing standards also weed out less attractive opportunities. In addition, you also get to enjoy real estate crowdfunding tax benefits.

Drawbacks To Consider

While real estate crowdfunding offers some excellent benefits, there are a few potential drawbacks to consider as well:

Illiquidity: Most real estate crowdfunding investments are illiquid, meaning there isn’t an easy way to cash out your investment right away. You may have to hold it to maturity.
Lower returns than direct ownership: The tradeoff for passive real estate investing is that returns are typically a bit lower than owning and managing properties yourself.
Risks still exist: Vetting and diversification reduce risks, but real estate losses are still possible if deals don’t pan out as expected.
Fees: Platform fees, fund management fees, carry charges, etc. can erode returns to some degree.
Tax headaches: You’ll likely receive multiple K-1s to report profits/losses, which can complicate taxes.

Is Real Estate Crowdfunding Right For You?

If you don’t have hundreds of thousands to invest, real estate crowdfunding allows you to gain exposure to assets that would be otherwise out of reach. It’s an easy way to build a balanced portfolio across different markets and sectors. Though returns may be a bit lower than direct ownership, passive income can be attractive for hands-off investors. Weigh the benefits and drawbacks relative to your specific investment objectives. For many, real estate crowdfunding does provide strong risk-adjusted returns and portfolio diversification without requiring huge upfront capital. If you take the time to evaluate offerings and diversify prudently, it can absolutely be worth considering.

Business

Private Listings by Harold X. Clarke: A New Approach to Fine Real Estate

Published

1 week ago

December 16, 2024

Matthew Wiles

Photo credit: Private Listings by Harold X. Clarke.

Byline: Andi Stark

Private Listings by Harold X. Clarke, a real estate platform operating across Hawaii, is rewriting how properties are bought and sold in the region. Unlike larger firms reliant on public listings and mass marketing, Private Listings’ strategy prioritizes personalization, privacy, and meticulous curation of ultra-high-end, off-market properties, including oceanfront estates, gated community residences, and architectural masterpieces.

Harold Clarke, founder of Private Listings, describes their method as one that rejects “cookie-cutter solutions in favor of understanding the nuances of both buyers and sellers.” This approach has resonated with ultra-high-net-worth individuals (UHNWIs) seeking refined and discreet real estate transactions.

The Hawaiian real estate market remains a hub for global investors, with the median price for a single-family home in the state reaching $900,000 in 2024, according to the Hawaii Association of Realtors. Within this competitive landscape, Private Listings is building up to be a trusted name for properties that extend beyond luxury into generational investments.

Challenging the Industry Norms

Private Listings deliberately avoids the conventions of large-scale real estate firms. By focusing on fewer, higher-value properties, the company ensures that each transaction is treated with the same level of care and confidentiality.

Public listing platforms, while effective for broader markets, often expose sellers to unnecessary attention or unqualified inquiries. For Clarke, this model is misaligned with the needs of UHNWIs. “Privacy isn’t a luxury for our clients—it’s a necessity,” Clarke explains.

This philosophy has led Private Listings to handle some of Hawaii’s most significant real estate transactions, including off-market properties valued at over $40 million. Its success is not measured by the volume of listings but by the depth of trust built with clients, many of whom return for subsequent transactions.

Adapting to Changing Client Demands

While Private Listings maintains a foundation of traditional practices, the firm also recognizes the evolving needs of its clientele. The global real estate market is increasingly influenced by concerns over digital security, with a 15% rise in data breaches targeting high-net-worth individuals in the past three years, according to cybersecurity firm NortonLifeLock.

To address these risks, Private Listings employs rigorous screening for potential buyers and uses secure platforms for communication and transactions. The firm’s “by invitation only” model ensures that clients remain protected from the pitfalls of public exposure. Clarke notes, “Our goal is not just to sell homes but to create an environment where clients feel safe and confident during every step of the process.”

The Human Element in Real Estate Transactions

Despite advancements in technology, Private Listings firmly believes that real estate transactions cannot be reduced to algorithms or automation. Unlike firms that depend heavily on online data aggregation, Private Listings emphasizes human connection and insight.

The company’s sales strategy integrates personalized client interactions, in-depth market analysis, and years of experience navigating Hawaii’s unique real estate ecosystem. Clarke’s background in managing family assets and his global perspective is significant in shaping this essence.

Future Directions for Private Listings by Harold X. Clarke

As Hawaii continues to attract global attention, Private Listings aims to expand its influence within the state while maintaining its core principles. The company is currently developing a new platform to streamline services for UHNWIs, blending their demand for discretion with seamless access to Hawaii’s finest off-market properties.

Additionally, Private Listings is strengthening its ties with local communities, recognizing that sustainable growth benefits both the company and the islands’ ecosystems.

Private Listings by Harold X. Clarke has set itself apart in Hawaii’s real estate scene by moving away from the typical mass-market approach. Through a mix of traditional values and modern sensibilities, the firm continues to define what it means to transact ultra-high-value properties with integrity and care.