2015 CrowdFunding Real World Cash Returns - Over 10%

I asked for feedback from our readers on their experiences with real estate crowdfunding.  We received quite a bit of feedback and over 95% of it was positive.  Most projects have performed as expected and no one has reported the loss of principle.  There are a few troubled projects on almost every platform and the platforms are working to resolve all of the issues.  As one would expect (since the industry is so new) most of the problems investments have been short term debt deals.  It is crucial for all debt investors to only invest in low loan to value deals.  The advantage to investing in real estate debt is the underlying real estate is used as collateral and the foreclosure of that property is what should ensure most investors do not lose equity.  The platforms have stepped up on every bad deal and are being proactive in taking over the collateral.

I personally started to invest in real estate crowdfunding deals in January of 2014.  2015 is the first year I was fully invested and I now have diverse data on how my investments are performing. Over the next few months, I will give detailed reports on my investments from each of the real estate crowdfunding platforms.   I thought it would be helpful to our readers to see my actual cash on cash returns from both my equity and debt crowdfunding investments from 2015.

In 2015 I had 20 different debt investments outstanding for at least part of the year.  My debt cash on cash yield was 12.38% for the year.  For reporting purposed I time weighted my investments.  For example, if I had a $10,000 investment that was paid off after 6 months, I counted that as a $5000 investment for the year.  If it paid $600 in interest, the yield would be 12% (600/5000).  The yield ranged from 0% to 25%. One Realty shares loan only paid back principle and two Realty shares loans paid an interest bonus at close if they hit certain goals. This resulted in their time weighted return to exceed 20%.

I had one Fundrise Brooklyn debt investment and it yielded 14%.  All eleven of Patch of Land loans paid on time each month and my yield was 12.4%.  A number of the loans asked for extensions and paid extra points for the privilege which were passed along to investors.  My two iFunding debt investments yielded 12.55%.  WI  came in at 11.76% and Almonaster at 14.58%. My six Realty Shares debt investments yielded 12.77%.  Normandie’s 0% yield was boosted by Pullman’s 25% yield and the Fix & Flip Fund 2 yield of 23%.

On the equity side, I had 34 investments outstanding during 2015.  My portfolio’s cash on cash return from equity distributions was 10.01%.  Eight of the investments had no distributions in 2015 as projected.  My overall returns were boosted from 5 investments that yielded over 20% each.  Here is a summary of all my equity investments.  Again they are time weighted.  If a $20,000 investment was outstanding for only 3 months, it was considered a $5000 investment for the year.

 

Investment Name

% of Portfolio %

Cash Yield Type   

Platform

Mobile Home Fund IV

10.46%

10.00%

Mhp

Private Syn

Mobile Home Fund V

10.46%

9.25%

Mhp

Private Syn

Self-Storage Rockledge FL

9.53%

10.22%

Self-store

Private Syn

Houston Retail center

7.84%

7.90%

Retail

Private Syn

Northbrook apt

5.23%

8.32%

MF

Real Crowd

Houston apt

4.71%

0.00%

MF

DIRECT

FL Self storage

4.18%

8.36%

Self-store

R Mogul

Cadence Fund

3.82%

0.00%

Retail

Real Crowd

WI Fund

3.66%

10.17%

Fund

Real Crowd

Self-Storage Spring FL

3.05%

8.14%

Self-store

Private Syn

Chase building

2.61%

29.89%

Office

R Shares

Hillcrest Apt

2.61%

13.91%

MF

Real Crowd

American Mini Storage

2.61%

25.19%

Self-store

R Mogul

Self-Storage Naples FL

2.54%

9.40%

Self-store

Private Syn

 Ferry med center

2.41%

12.17%

Medical

R Shares

 Slausson

2.20%

50.76%

Groundup

Real Crowd

 Chapel Hill

2.09%

0.00%

Office

Fundrise

Mobile Home Fund 3

2.09%

7.84%

MHP

R Mogul

Cottage Grove

1.78%

22.95%

Groundup

iFunding

Manhattan Strip mall

1.67%

7.03%

Retail

R Shares

AL Ground UP

1.57%

0.00%

Retail

Real Crowd

Safeway

1.57%

4.21%

Retail

R Shares

Las Vegas Chipotle Retail

1.57%

7.69%

Retail

R Shares

Oak Harbor apt

1.50%

12.10%

MF

R Mogul

Mobile Home Fund 6

1.31%

0.00%

MHP

Private Syn

Memphis Marriott

1.31%

9.01%

Hotel

R Mogul

LA Industrial

1.09%

0.00%

Groundup

DIRECT

Fort Davis office

1.05%

7.20%

Office

Real Crowd

Linden Austin TX

1.05%

19.67%

Groundup

iFunding

Palms Multi Family

0.86%

0.00%

MF

R Mogul

Westmount apt

0.68%

8.66%

MF

Real Crowd

Equity fund

0.50%

0.99%

Fund

Fundrise

Phoenix Industrial

0.19%

0.00%

Industrial

Real Crowd

Westpark plaza (equity returned)

0.00%

100%+

Retail

R Mogul

Total

100%

10.01%

 You can discover, rate, and review patch of Land investments at CrowdDD.com.

 

Mark Robertson

Member Since: 2016

Feb 11,2016@03;56 PM

 

I had a few questions about clarifying my returns:

A lot of equity deals are set up to have very little cash flow during the first year or 2. Ground up development and value add stuff typically show very little return until the exit. For the most part the deals that showed $0 distributions were those type deals. The one exception is the Atco Chapel Hill deal, they suspended distributions as they are upgrading the property for new leases. Long term it should be good news, but it is paying less than projected at the time of the investment. Only one of my debt deals had no distribution. Debt deals are the first crowdfunding deals to get into trouble because most have a 12 month term and 100's have gone for cycle. Most equity deals are around 5 years so very few have gone full cycle and the returns are not know yet.

Am I surprised my debt returns are higher than my equity returns:

Not surprised at all that debt did better on a cash on cash return in 2015. The key is this was cash on cash return. There are embedded gains in a lot of the equity deals that are hard to quantify, so I did not. I was actually surprised it was as close as it was. About half of an equity deals return will come on its exit. The vast majority of my equity deals have not gone full cycle. 9 deals paid 1% or less and my equity portfolio still yielded 10%. 5 equity deals had at least a partial exit which helped boost overall yield.

Expectations? Good question. I have a lot less debt exposure now than I did in 2015. I have 8 loans outstanding now down form a peak of 20. Cash flow will be down, but I suspect returns will be in the 11 to 12% range. I suspect my equity returns will increase in 2016 unless the Shi& hits the fan. One of my larger MF investments is to close next month and the gain should be over 50% on a 19 month hold. I will say I do not like what the stock market is signally, so I am a bit nervous.

I suspect my returns may be at the high end, but I am not sure how to measure that. I've had my share of mistakes. I suspect the proof will come during the next slowdown. Over 50% of my portfolio is in self storage, mobile home parks and value add. I hoping that will protect me over the long haul.


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