Ok so we get the question all the time; Where does my money go and how do I get my money back?
First lets just review the basics; In Arizona real estate Investing is a great way to diversify your investment portfolio.
Real estate crowdfunding has opened up a new path for unaccredited investors wanting to invest 1K to 10K.
What is real estate crowdfunding?
Real estate crowdfunding is an easy way for borrowers and investors to pool funds together for different real estate investment projects. Both parties benefit from real estate crowdfunding. Borrowers can quickly raise funds for projects and investors can add real estate to their portfolios.
There are two primary ways to invest in real estate crowdfunding. You can either make equity investments or invest in debt investments. In equity investments, the investor receives an equity stake in the property in exchange for funding the project. The returns are in the form of a preferred interest, plus a share of the profits that the property generates. Real estate investors receive payouts after the sale of the property and distribution reconciliation.
On the contrary, when you invest in debt, you’re investing in the mortgage loan that is associated with a particular property. The loans are repaid with interest, a percentage of which is then paid to each real estate investor participating in the deal. Of the two types of investments, equity investments offer a higher return on investment since the profitability of debt investments is limited by the interest rate of the loan.
What are the advantages of real estate crowdfunding to an investor?
Real estate crowdfunding has the upper hand in terms of transparency and control over asset selection and location. Other types of real estate investments like REITs give real estate investors limited information about the underlying access. Crowdfunding is regulated by the SEC and requires that investors have the opportunity to review all the details concerning the project, before making a final investment decision.
Availability of low levels of investment
With the passing of the J.O.B.S act, new crowdfunding rules allow unaccredited investors to invest $1,000-$10,000.
Having proper diversification is proven to increase your overall long-term return on investment. Real estate crowd funding allows investors to diversify their portfolios with an array of investments both in commercial and residential properties. Investors have the opportunity to gain exposure to a new asset class with very few barriers to entry.
No work involved on your behalf
We use our expertise gained from over 30 years of “flipping” hundreds of houses to asses our deals. Then we provide all our due diligence on the property including timelines, expenses and resale estimates into an “offering memorandum” for you to review before making an investment.
Ability to be involved with proven experts on a real estate project
One of the most appealing aspects of real estate crowdfunding is that investors have the ability to invest in multiple projects over time with proven crowdfunding experts. Real estate crowdfunding gives investors the flexibility to pick and choose the deals that they find most attractive.
Who can participate in real estate crowdfunding?
Currently, you must be an Arizona resident to invest in one of our projects. Until recently, only accredited investors were allowed to invest in real estate crowdfunding. An accredited investor is someone who has a minimum net worth of $1 million or an annual income of at least $200,000! However, the regulations concerning real estate crowdfunding have changed over the past few years. Now, non-accredited investors who earn less than $200,000 annual income are able to invest $1,000 to $10,000 into a local real estate project.
How many projects has PhixNPhlip done?
PhixNPhlip.com Real estate crowdfunding projects:
- Arcadia Lite PHX= 3433 E. Sells Dr Phoenix AZ 85018
CLOSED= Watch for project updates as this house gets built and keep an eye out for the “return” on this project by the end of the year!
- Earll Drive PHX = 2244 E. Earll Dr Phoenix AZ 85016
CLOSED= Exciting partnership project that is just getting started. Keep up to date by connecting with us on Facebook.
- Tremaine Drive CHR=373 E. Tremaine Drive Chandler AZ 85225
OPEN to crowdfunding utill 9.25.19 or when fully funded. INVEST TODAY
Ok so what happens to my $Money, When do I get my $Money Back, and what do with my $ Money then?
First, when you click on the “Invest Now” button on PhixNPhlip.com, you will be directed to our secure 3rd party escrow service. The escrow company provides an encrypted page and SSL Secure site to enter your information and become a “subscriber”. The information needed to become a subscriber; vesting information, amount investing, payment info and E-signs agreement. The best part is it only takes 5-10 minutes to invest after you complete your due diligence.
Next, you will get a copy of the Subscription Agreement and Offering Memorandum to review. All of the details about the project from purchase to resale are provided for your review. Also, included are the details on the return of your investment, interest rate and net profit participation details.
The escrow company holds the funds until the raise date. During that time investor verification of identity and bad actor checks are conducted. Once investor(s) has been “cleared” and funds confirmed, the funds are moved into a segregated account at a FDIC insured bank. Next, the escrow company releases funds to the issuer, records in escrow, completes investor ledger and reports to SEC.
During the time of the construction phase while your capital is earning interest, PhixNPhlip will provide updates and estimate distribution times. We have videos, blogs and facebook project updates almost weekly.
When the project has been sold, the issuer will complete an audit of all expenses and final distribution accounting. After the distribution is reconciled, your capital investment will be returned with preferred interest and a parentage of the NET Profit from the purchases and resale of the project.
Our goal is a 12%-18% return, have multiple projects to choose from and able to reinvest your capital into the next PhixNPhlip project.
This blog should be used for informational purposes only. This blog should not be construed as legal , real estate or financial advice. If you need legal advice regarding Crowdfunding Laws, or any other litigation matters, contact an attorney in your area.