Historically, commercial property has been a prime investment almost exclusively for the wealthy, and largely unattainable for the average investor. Recently, however, several companies have opened the doors for mainstream investors by creating non-traded crowdfunding real estate offerings with low minimum initial investments, and yields that consistently outperform the stock market.
stREITwise is one of the many companies to occupy this space. In addition to sharing what unique traits this company has to offer, and historical funds data, this review will provide the most up-to-date BBB rating and need-to-know factors so you can determine if it’s a good fit for your portfolio and your wallet.
What is stREITwise? (Review)
Crowdfunded Real Estate Investment
My stREITwise QUICK-LOOK Review
Company Name: stREITwise
Company Website: https://streitwise.com
Co-Founders: Eliot Bencuya, Jeffrey Karsh, Joseph Kessel
Minimum REIT Investment: $1,000
Investment Term: 1+ years (5+ year term for 100% return – see details below)
Account Fees: 3% upfront, 2% ongoing management fees
Annual Yield: 10% / historical quarterly paid dividends
Property Types: office and mixed use industrial property with cash flow
Accolades: none at this time
RELATED: For general information on REITs, and an additional REIT opportunity, read this article: What is DiversyFund? (Review) Real Estate Investing Platform
The Real Estate Attraction
Why should you be interested in investing in a crowdfunded non-traded REIT?
That’s a mouth full. But, what it means is that public investors collectively finance a portfolio of income-producing properties that have been forecast to return dividends and, eventually, capital gains.
Non-traded means that the REIT shares are not sold on any stock exchange. These shares are sold directly by the company who owns and operates the properties within the real estate portfolio. (Therefore, no broker’s fees!)
REITs have historically provided investors these benefits:
- diversification in a lower risk investment than the volatile stock market
- passive income through cash-flowing properties with appreciation value
- higher annual returns than the stock market
- inflation hedge
Crowdfunded REITs are now extending the opportunity of investing in real estate to the mass market by setting low minimum investment amounts.
stREITwise is one of the companies currently offering the lowest initial investment to get you started for less.
*** “Public Bonds” is the 30 Day SEC yield as of 8/31/2019 of the iShares US Aggregate Bond Index Fund as reported by iShares. “Public REITs” is the Q3 dividend yield of the FTSE NAREIT All Equity REITs U.S. Real Estate Index as reported by FTSE NAREIT. “stREITwise” is the year-to-date dividend yield as of 9/30/2019 of 1st stREIT Office, Inc.
My stREITwise FULL Review
Since 2013, stREITwise has aimed to provide investors steady returns for the long-term. In 2017, they opened the 1st stREIT Office REIT, and have consistently delivered returns to investors by following a specific investment strategy.
Their investment strategy is focused on 4 Key Factors:
1. Value Oriented Investments
- these are properties in close proximity to transportation and amenities with established employers and sustained occupancy
2. Non-gateway Markets
- markets that are fairly priced and generate higher dividends
3. Creditworthy Tenants
- including Wells Fargo, IBM, Edward Jones, Verizon, Panera Bread, Nationwide, Berkshire Hathaway, New Balance, Walgreens and more
4. Modest Leverage
- to provide maximum flexibility with minimal risk
*** map shows current REIT holdings, plus additional properties owned by Sponsor, and target market.
The 1st stREIT Office REIT
An Affordable Way to Get into Real Estate
Though some competitors are setting (or raising) the minimum initial investment to $5,000 or more, stREITwise is holding strong at $1,000 to appeal to more investors. For a real estate investment, this is very minimal.
The Details on the “1st stREIT Office” REIT
- Open to both accredited and non-accredited investors
- Designed to provide investors with quarterly income through industrial-quality office buildings
- Currently comprised of 2 properties in St. Louis and Indianapolis, and actively pursuing additional assets
Account Minimum Investment:
The 1st stREIT Office REIT currently has a minimum investment amount of $1,000.
The Potential Return:
stREITwise has delivered 10% annualized quarterly dividends (net of fees) since inception in 2017.
At this time, stREITwise anticipates the same consistent dividend of 10% going forward, and plans to continue paying quarterly dividends.
*** Past performance may not be indicative of future results. Since inception annualized dividend includes all dividends from commencement of operations of Our Current Offering through the quarter ending September 30, 2019.
Click to view the 1st stREIT Office REIT Circular for SEC filed information.
Must-know Investment Information:
Like all REIT investments, this is meant to be for long-term growth and income. Investors should expect to see their money in action for 5 years or more.
However, to accommodate interested investors who want flexibility in the event that they need their investment money back before the term ends, stREITwise has implemented a Stockholder Redemption Plan.
Here are the details of the Stockholder Redemption Plan:
- 1st Year LOCKOUT – no redemptions allowed
- 1 until 2 years – 90%
- 2 until 3 years – 92.5%
- 3 until 4 years – 95%
- 4 until 5 years – 97.5%
- More than 5 years – 100%
So, if need be, you can request a return of your investment after only 12 months, and any return prior to the 5 year term will be returned at a discounted amount as disclosed above.
After 5 years, you can request a return of 100%, which will be paid out as capital is available. Sometimes this is all at once, and sometimes it is through multiple payments over time depending on cash flow.
INVESTOR NOTE: In order for capital to be available for repayment, the REIT has to have sold one or more properties. As it is the intended goal of a REIT to repay investors the highest yield possible, it will sell when it determines the most opportune time to do so. Hence, the undetermined nature of the term of repayment, and the purpose of the long-term investment. The longer you leave your money invested, the more likely you’ll be to see a higher return.
What the stREITwise REIT Offers
- an alternative to the stock market with historically higher return potential and inflation protection
- LOW MINIMUM INVESTMENT
- $1,000 minimum initial investment (additional investments here may be made in increments of $500)
- NO BROKER FEES
- However, there are account management fees of 3% upfront and 2% ongoing
- PROFITABLE TRACK RECORD
- They have consistently delivered annualized quarterly dividends of 10% since inception in 2017
- CUSTOMER SATISFACTION
- This is hard to gauge with stREITwise, as the reviews are good, but few.
What Does the BBB Have to Say about stREITwise?
stREITwise has been listed with the BBB since October of 2017, and currently has an A+ rating.
At the time of this review, they have no filed complaints.
The PROS and CONS
Overall, the stREITwise website is very informative. They provide a clear investment strategy, detailed information about the current assets and their tenants, a thorough FAQs page, and an easy step-by-step account sign up.
- A+ BBB Rating
- The Stockholder Redemption Plan offers some flexibility in a typically illiquid investment
- Low Minimum Investment Amount of $1,000
- Lowest account management fees offered in a REIT
- No Hidden Fees –
- Investors confirm that they are charged 3% upfront and 2% for ongoing management fees with no other hidden fees. (Some companies have been known to hide fees during dividend distributions, or charge them in the form of “other expenses.” Be sure you know what the fee structure is of any REIT before you invest.)
- Consistent Quarterly Cash Paid Dividends (to date)
- 10% annualized dividends is higher than the average stock market return and many other crowdfunded REITs at this time
- Currently only 2 properties in the REIT portfolio = not very diversified. However, they do state intentions of including additional properties, and are analyzing possibilities.
How Do You Become an Investor?
The process of getting started follows a guided account set-up where you will:
- Enter your Name, Email, Entity (Individual, Company, Trust, Self-directed IRA or 401K)
- Declare your Investment Amount
2. Complete your Profile
- Enter your Address, Phone Number, Social Security Number, and Date of Birth
3. Declare your Investor Status
- Select Accredited or Non-Accredited Investor
- Provide additional supporting information for status
4. Complete an ACH Authorization Form
5. Sign the Investor Agreement
Periodically, the sign up page displays the following notification, stating that NEW investments are on hold:
I spoke with Alex Wills, the stREITwise Marketing Director, to inquire as to why they would temporarily stop accepting new investors.
Alex explained that in an effort to keep their platform current and functioning properly for all investors, they will typically make adjustments once a year, which temporarily pauses the use of the sign-up page.
No worries. If at any time in the future, you should see this “on hold” message, just check back after the estimated closed period, or enter your email to receive an ‘open’ notification, and you’ll gain access to their account sign up page with the latest modifications.
* Disclaimer – BYIO is not providing investment advice. BYIO is not promising a return on your investment. BYIO suggests you consult with your financial professional, or make sound judgment on your own, when debating investing in stREITwise or any other online investment company. We’ll keep sharing what information we have, and we hope you make a lot of money!
Some stREITwise FAQ’s
1. Why stREITwise?
Low initial investment. Transparent fee structure. Historical and targeted 10% dividends.
2. Can I invest more than $1,000?
The amount you can invest depends on things like income and net worth. You can discuss your options with a real estate expert at stREITwise to determine your best investment plan.
3. Do I have to take the quarterly cash dividends?
No. You can opt in to reinvest your dividends if you prefer.
4. Why can’t I get my money back whenever I want?
The easiest way to explain this, is to have you think for a second just where your money is going…
Real estate investments provide income to investors through two main avenues:
- collected recurring income payments from tenants
- appreciation in the properties
Both of these are events that happen over time.
Typically, the more time that passes, the more income is collected through tenants, and the higher each property appreciation value will grow.
More time is what brings you more money.
If you are looking for a quick return, then real estate is not your ideal investment. If you’re looking for a higher than average return, with a lower than average level of risk, and have a few years to let your money work for you, then real estate may be your perfect investment.
5. Can I contact someone at stREITwise if I have a question?
Yes. Here is their Contact Information:
Address: 10990 Wilshire Blvd STE 1060, Los Angeles, CA 90024
Phone Number: (310) 421-1030 or (310) 907-5527
E-mail: via message form on their contact page, or Facebook Messenger
You can also find them on these social media platforms:
Facebook | Twitter | LinkedIn
Who are stREITwise’s Competitors?
Click to read our DiversyFund Review. Minimum initial investment is $500, but no early redemption plan.
Click to read our Realty Mogul Review. Minimum initial investment is $5,000.
Click to read our Fundrise Review. Minimum initial investment is $500.
Click to read our CrowdStreet Review. ACCREDITED INVESTORS ONLY. Minimum initial investment $25,000.
Click to read our Rich Uncles Review. No minimum initial investment required.
There are many real estate crowdfunding companies available to choose from. We’ll keep reviewing, and updating. We hope you find the right company to meet your goals!
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