Bullian said he contributes an average of $10,000 in each deal for returns of about 10 percent to 20 percent, similar to what he was getting from a marketplace lender.
“I really like the risk profile of real estate deals compared with some other investments because they’re secured,” Bullian said. “If something goes bad, you have the asset to fall back on.”
Income Requirement
U.S. Securities and Exchange Commission regulations require investors to be accredited, or meet conditions such as an annual income of at least $200,000 or a net worth of $1 million. Individuals generally put in a minimum of $1,000 to $5,000 and are promised interest-only payments each month, with the rest of their money back at the end of the loan term. Some enroll in automatic options that invest in a variety of deals for diversification.
Through RealtyShares, investors can raise different kinds of debt and equity. The company verifies and underwrites every offering, according to CEO Nav Athwal. Of the prospective projects brought to the company, only about 3 percent are selected to be listed, he said.
LendingHome keeps loans in a bankruptcy-remote entity so the debt and repayment streams are insulated from anything that may happen to the firm. The company had previously only offered loans to institutional investors, according to CEO Matt Humphries.
Bankruptcy Remote
Patch of Land also keeps loans in a bankruptcy-remote entity. The company generally requires borrowers to provide personal guarantees and to put at least 20 percent of their own money into deals, according to AdaPia d’Errico, the chief marketing officer.
Sifakis, the Florida flipper, said he typically gets a $3 million line of credit from an investment firm for about every $1 million he raises on RealtyShares, giving him added buying power.
“It’s the greatest thing in the world,’’ Sifakis said. “The amount of money you can raise isn’t limited by anything but their investor base. And the investor base is growing and growing.”