Using crowdfunding to buy a piece of real estate is still marginal in the world of real estate property. Indeed, I recently spent some time to read about what other property bloggers and newspapers have to say about it. Well, they don’t say good things. At all. I think the most stunning example of bad press for crowdfunded real estate is the guy that that tried to pitch investors in Shark Tank.
REITs, which stands for Real Estate Investment Trusts, are also not so appreciated in the real estate investment world. However, they are very appreciated by dividend investors because of their high yield compared to other stocks.
In this article, I want to give you another story that the one you can usually read online. I want to tell you about my own experience with crowdfunded real estate & REITs: what is my experience with property, why I got into crowdfunded real estate & REITs, and why I will never leave this space.
I am what people usually call a landlord by accident. My goal in 2009 when I bought my first piece of real estate was simply to own my main residence, and not to be a landlord. It was adapted to my needs at that time: a simple studio apartment in Germany, where I was living at that time. And I planned to live there for quite a while. However, in 2013, life took another turn and I wanted to move out of this city, but I still had this apartment. I decided not to sell it, but to rent it.
It rented really quickly, and I got interested by the property investment field. It was amazing to be able to get monthly payments, and also to appreciate the possible capital gain on the flat, as the little city where the flat is located was booming. I wanted more.
However, it was also the time I started working on my own as a freelancer. Therefore, I didn’t have enough money to buy a new piece of property, and also not enough trust to get another loan from a bank. Banks like employed people, not people starting their own businesses. It seems that until my business really started to make significant money, I was stuck.
It’s only in 2014 that I started to think about property investment again. I still didn’t have enough money for a good downpayment for another property investment, but I had a trading account that I just opened. So I started to learn more and more about REITs. These are companies that mainly invest in property, and that you can buy shares on stock markets all around the world. Using the money I had at the time (not much!), I started to invest in REITs. The first one I ever invested in is called Realty Income Corporation (ticker: O), which is company that has a nice yield of 4.90%, and also pays monthly, just like a rent. This was the beginning of my journey as a digital landlord.
Then, I learned about real estate crowdfunding. I discovered it was possible to invest in property with other people, and therefore, own property without having to take a loan or to make a significant downpayment. I could become a landlord once more, get the same benefits (with a lower yield due to property management fees), without all the issues that can come with owning property yourself. I was sold, and since then I continued to invest in crowdfunded real estate & REITs.
There are so many advantages of investing in property using these two ways. I speak about it in other articles on this website, where I tell you why I love REITs and why I love crowdfunded real estate. However, I will just give you some examples here. I recently invested in a residential building in the UK that cost about $500.000, which I wouldn’t even be able to consider if I was investing in my own pieces of real estate. There is also the cool thing about investing in overseas property, just by some clicks on your computer. Using REITs, I also have investments in the healthcare real estate sector, like hospitals and elderly homes. This would be nearly impossible to achieve without using REITs.
I know this is just the beginning of my journey as an investor in property, but it already feels amazing. I am not saying I will only invest in REITs and crowdfunded real estate for the rest of my life. I believe in diversification, and I plan to own a balanced portfolio between classical real estate, REITs (and other stocks), and crowdfunded real estate.