Streitwise is a real estate investment platform focused on commercial real estate. As an investor, you can get started and participate in large real estate projects with just $ 1,000.
Dispute has a very simple structure for their pricing and I’ve seen that they are rated as not only one of the lowest on pricing but also one of the top rated companies in this space overall.
Additionally, both accredited and non-accredited investors can participate – something that many competitors shy away from.
What is Streitwise?
Streitwise opened a store in 2017, so it’s a relatively new company. They are based in Los Angeles and focus solely on REITs (hence the funny spelling of their company name). Streitwise is aimed at individual accredited and non-accredited investors.
Streitwise is NOT a crowdfunding site
One of the main differences from Streitwise is that it is a REIT (Real Estate Investment Trust), not a crowdfunding platform like many other online real estate investment brokers.
Put simply, a REIT is like an ETF or mutual fund with a variety of real estate investments – in this case commercial real estate projects.
Crowdfunding, on the other hand, is when you contribute directly to an individual or small group of real estate projects and are directly linked to their success or failure.
This, of course, has advantages and disadvantages, and it is up to you as an investor to decide which option is best.
There are two ways you can earn with REITs
In addition, this REIT is viewed as a share REIT. This means that not only will you receive dividends on the investments (through cash flow from rental payments on commercial property), but you will also benefit from an appreciation in the underlying value of the commercial property itself.
They have a great accreditation
Finally, Streitwise has a BBB (Better Business Bureau) Rating of A +This is the highest rating you can have as a company.
How does Streitwise work?
Getting started with Streitwise is pretty easy. Simply click on “Start investment” in the upper right corner of the Streitwise homepage:
On the next page, click Get Started.
You will then get a popup asking you to fill in some basic information about your investment as well as yourself:
In the next step, you will be asked to provide additional information about yourself, including your address, phone number, and social security number:
You will then have to fill out a short questionnaire in which you tell Streitwise whether you are an accredited investor or not based on your income and net worth:
Then enter your bank account details to top up your account:
Here things get a little more spatial. After you’ve entered your bank account details, it will take approximately a day or two for your funds to be transferred to an escrow account.
After that, your money will be received and kept in an escrow account for approximately 10 days before it is released for stock issuance.
Once your money is clear, the money is usually invested in the middle of the month or at the end of the month depending on when exactly your money is clear.
At this point, you will receive an email stating that your account has been funded. You can create a username and password for the account and then start monitoring your account.
Unfortunately, it will take more than four weeks for your account to be topped up and ready to use.
Pricing for Streitwise
If you are unfamiliar with REITs, it is helpful to know that they carry More Risk than traditional investments such as stocks or index funds. REITs also tend to have much higher fees than your average equity fund.
Besides that, Streitwise charges a 3% upfront investment fee (for organizational costs) in addition to an administration fee of 2% (annually). However, the 2% fee has been removed from the dividend, so investors won’t see that deduction from their property either.
These fees may sound high, but Streitwise notes that no amount will be deducted from the stocks you buy and that 97% of your investment will go to the REIT & Operating Partnership as proceeds.
That may sound like a tall order, but you’re not comparing apples to apples. It’s apples to oranges – that is, REITs belong to a different category than equity funds. So this is relatively inexpensive for a high quality REIT. I was also impressed that Streitwise was rated with the best fees The report of the Real Estate Crowdfund.
One final note on fees: These fees are charged to you regardless of the REIT’s performance, so there is some risk involved.
Low minimum investment
You can sign up for Streitwise for at least $ 1,000 and get started. This is fantastic when you think about the types of investments you have access to (large commercial real estate).
That $ 1,000 can be increased in $ 500 blocks if you want to invest more (i.e., $ 1,500, $ 2,000, $ 2,500, etc.).
Multiple account types
One of the things I love about Streitwise is the flexibility with the account types. You can open an Individual Taxable Account, Individual Retirement Account (IRA), or even a trust.
Reinvest your dividends automatically
One of the features I found most useful was the DRIP (Dividend Reinvestment Plan) option, which allows you to automatically reinvest your dividends back into the REIT you hold.
This is a common practice with a lot of robo-advisors, but it’s really nice to see with a platform like Streitwise that isn’t that fluid. Hence, from time to time you will get an extra boost from dividends.
One of the drawbacks of most real estate investment platforms is the lack of liquidity. Since you are putting your money into a real estate project, basically selling just a dime is not as easy as selling a stock.
For this reason, Streitwise has a blocking period during which you cannot liquidate the money invested. What is nice, however, is that this embargo period is only one year. So it’s almost like buying a one-year short-term CD.
Once you have passed the 1 year mark, you can opt to participate in the shareholder redemption plan, which takes place quarterly. Well, there are specifics that you will need to manage depending on the specific REIT you have invested in.
In principle, with the share redemption plan, you can receive a percentage of the net asset value (net asset value) that you owed up to five years. From that point on, you can liquidate everything.
For example, you will only receive 90% NAV within the first two years if you liquidate. But if you wait five years you will get 100%.
The point here is that Streitwise and REITs in general are long-term investments. So be ready to let your money stand for a while.
Helpful tax benefits
In case you missed it A law was passed in 2018 This changed some of the tax breaks for business income, earned income for individuals, and REIT investors (in addition to other changes).
With the change, REIT investors can now deduct up to 20% of the dividends you’ve earned from your taxable income. Which is absolutely huge.
And like anything else with taxes, there are rules, regulations, and exceptions. So you should read the fine print. Essentially, however, a REIT’s taxable income can be reduced through its depreciation expense.
In accounting, this is considered a non-cash expense and is quite common in most real estate investments.
Aside from this huge tax advantage, there are a few other things you should know about taxes at Streitwise, especially when it comes to paying dividends:
- Any dividends that come from earnings (like normal dividends) are taxed at normal income tax rates, as would be the case with stocks or other investments.
- Capital gains dividends (when an investment is sold for more than what it was bought) is taxed at the long-term capital gains tax rate. Keep this in mind if you are receiving dividends from a REIT that is doing very well.
- The repayment of capital dividends is usually not taxed. Essentially, a capital dividend is when a company pays you a dividend out of equity or paid-in capital (as opposed to paying out the company’s earnings). This is a nice bonus as your tax liability will be lower and you will be able to maximize capital gains in the future.
During a great control software like TurboTax Usually solving these issues for you is good to know what to expect in terms of taxes and REITs. Now you can skip all of that fuss when you open a tax-free account (ex. An IRA) with Streitwise and start growing your income tax-free.
Who is Streitwise for?
While Streitwise allows both accredited and non-accredited investors (remember – this means you meet certain income and / or wealth requirements), there are restrictions on non-accredited investors.
As an accredited investor, you can invest in anything you want and invest as much as you want. Note that as an accredited investor, you must earn $ 200,000 or more if you file your taxes individually, or $ 300,000 if you file as married.
The other way you can achieve accredited investor status is if you have a net worth of at least $ 1 million that does NOT include your primary residence. For most, this is a pretty big job.
If you are not an accredited investor (which means you do not meet the requirements listed above) you can still invest but have limitations.
To be precise, you can only invest as much as the greater of both:
- 10% (or less) of your total annual income.
- 10% (or less) of your total net worth (this excludes your primary residence).
For example, if you make $ 60,000 a year and your net worth (excluding your home) is $ 100,000, you can only invest $ 10,000 (10% of the higher amount between the two).
So all in all, Streitwise is really intended for anyone who wants to invest in real estate investments – especially large commercial projects – and who need to invest at least $ 1,000.
Who shouldn’t use Streitwise?
If you’re someone who doesn’t want to take a lot of risks, you can’t stand having your money tied up for at least a year (but probably more if you want to get the full benefit of it) and don’t do it. If I didn’t really know a lot about real estate, I’d probably stay away from Streitwise.
It takes some knowledge of the real estate market, some money, and a certain level of comfort to make your money stand for a long time.