Want to invest in real estate but don’t want the headaches of landlords, financing, renovations, renters, permits, inspectors, direct mail campaigns, and all the other hassles that come with a real estate investing side hustle?
Me too. I’ve owned dozens of single-family rental properties, but today, I only invest in real estate passively.
Passive real estate investments include notes, funds, real estate syndications, and real estate crowdfunding investments. None is inherently better or worse than the others, or even than active real estate investments. They just come with different pros and cons.
But they also come with a catch: Many don’t allow non-accredited investors. Paternalistic Uncle Sam doesn’t think that everyday people are responsible enough to access certain types of investments. As a result, anyone with a net worth under $1 million (not including home equity) or incomes under $200,000/year can’t invest in many passive real estate investments, classified as 506(c) investments with the SEC.
Some passive investments, classified as 506(b), do allow non-accredited investors. These, too, come with a catch, however: The government doesn’t allow them to be advertised publicly.
So, how can you find passive investments that let you in if they can’t advertise?
Crowdfunding: An Easy Starting Point
Some real estate crowdfunding platforms allow non-accredited investors. I’ve invested in most of the largest ones myself.
They vary by quality, historical returns, and reputation. I’ve had good experiences with Groundfloor, Ark7, and Arrived. Fundrise has had a tough few years but appears to be recovering. The same goes for Streitwise.
Most of these let you dip your toe in the water with $10 to $100. When you first start investing passively in real estate, that makes it far easier—and more comfortable—than the $50,000 to $100,000 sometimes required by private equity investments.
Interestingly, some real…