Investing in real estate isn’t just for the rich. If you’re looking for a passive income method, Concreit is a platform that can provide the ability to invest fractionally in commercial real estate assets without direct ownership. In our Concreit review, we’ll show you what Concreit is, how it works, and who should consider using it.
What Is Concreit?
Concreit is an incredibly easy-to-use real estate investing app designed for investors of any experience level. They offer the opportunity to invest fractionally in real estate without owning properties outright. Instead, you invest by purchasing shares of a fund, such as their cash-flow strategy which invests in private money lending for commercial real estate. Unlike traditional private equity real estate investing where you may need a lot of initial capital, you can invest with as little as you want with Concreit.
Concreit was founded by Sean Hsieh and Jordan Levy, successful entrepreneurs who had previously co-founded a company together. After selling their first company, they both jumped into commercial real estate investing to build up their passive income streams and grow their net worth. Once they experienced a sense of financial freedom from their private real estate investments, they wanted to find a way to make exclusive private equity real estate strategies accessible to the everyday investor, which is where Concreit started.
Concreit currently offers a Cash-Flow investment strategy that is designed to be a mid-term alternative savings strategy with a high yield, and maintain a lower risk profile than real estate developments.
How Does It Work?
Concreit pools all investors’ funds together to invest in various real estate projects. Their Cash-Flow fund holds private short-term loans backed by real estate assets, including loans for residential and commercial real estate (multi-family, industrial, office, etc.) developments. Your cash that is invested is typically overcollateralized by real estate assets as a way of protection.
Concreit incorporates an institutional investment diligence process and doesn’t invest in every opportunity that they see. Instead, Concreit’s Investment Advisory Committee vets hundreds of opportunities before carefully selecting the ones that meet the objectives for investors through quantitative and qualitative techniques.
The Investment Advisory Committee comprises real estate industry experts or people who can recognize a good investment and stay away from the bad ones. They have over $10B in asset management experience collectively, and are experienced in equity and debt investments, managing funds, tax and regulatory requirements, and economic factors.
Reasons to Consider Real Estate Investing
You might wonder if real estate investing is right for you. If you don’t have experience in it or don’t have a lot of money in your savings account, it might not be an option you’ve explored yet. Since Concreit makes it easy for anyone to invest in real estate through their app, it helps to understand why you should consider real estate investments.
Potential for Income
Income-producing real estate provides the opportunity for cash-flow generation and not just potential equity appreciation. When investing in real estate, depending on the investment, income could be paid out on a monthly, quarterly or more infrequent basis. Concreit has streamlined distributions and typically provides weekly dividend payments that get automatically reinvested to compound.
Long-Term Capital Preservation Asset
Because real estate values often appreciate, it can provide peace of mind knowing your money can grow each year and serve as a way to preserve your capital. In addition, if you can keep the money invested for the long-term, you’ll have a nice nest egg to tap into when the time comes where you may want to sell or tap into your money.
Hedge against inflation
Real estate has historically appreciated, which can make it a good hedge against inflation. Many of the homes that were negatively impacted back in the 2008 bubble burst have returned to their pre-crash prices in less than a decade, and can give potential market-adjusting income on rents.
Helps Diversify Your Portfolio
Diversifying your portfolio has been viewed to be a smart decision for many investors. Putting all your eggs in one basket is very risky because you could lose everything. When you invest in multiple assets, you reduce the risk of a total loss and increase your chances of larger capital gains. Real estate can be a great way to discover lower correlation to the publicly traded markets.
Tax Advantages
Investors may benefit from favorable real estate tax deductions depending on many factors. Real estate has historically served to provide tax advantaged returns through deductions, depreciation and even unique REIT tax advantages.
Concreit Features
Here are the top features Concreit offers real estate investors:
Friendly Minimums
Most investments in real estate require a lot of capital. You typically need 30% or more down to get financing, plus several months of reserves on hand. When you invest with Concreit, you can invest any dollar amount, whether it’s $100k or as little as $1. So while you’ll want to invest more money over time, it’s a great way to build your real estate portfolio.
Automatic investments
Concreit has made it extremely easy to setup auto-investments to build up a savings plan customized to you. You can choose to setup a schedule to match your paydays, specific monthly dates and even weekly.
Dividends that are paid out get reinvested automatically on your behalf to help investors earn more through compounding their investments.
Savings-like simplicity
Concreit’s Cash-Flow strategy offers a flexible redemption program to facilitate withdrawals for investors that need their cash for emergencies. This is traditionally not offered with other private equity investments at the same weekly cadence that Concreit strives for. The funds may take longer to get back than a bank, but it might be a great fit for those who want to really put their money to work and still have potential access to it.
High Average Returns
One of the key features anyone wants when using an investing app is a guarantee of great returns. While Concreit can’t guarantee the returns, on average with their Cash-Flow income fund, they offer 5.5% – 6.5% in annual returns. As of February 2022, this has largely outperformed the public markets in fixed income, while providing a steady returns without the highs and lows of the stock market to impact your money.
Who Can Use Concreit?
This is one of the best things about the Concreit app is that anyone can use it. The founders believe that everyone to have the opportunity to invest in real estate and have access to tried-and-true investment strategies to help build their portfolios.
Keep in mind, even though anyone can use it, investing in real estate involves varying degrees of risks depending on the strategies. Make sure you’re aware of the risks and only invest what you can afford to lose should the worst happen.
Designed for both Accredited & Non-Accredited Investors
Most private equity investments only allow accredited investors with at least $200,000 annual income and a net worth exceeding $1 million. This requirement has historically excluded many people from investing in underlying real estate assets.
Concreit allows non-accredited investors through its SEC-qualified offering. As an SEC requirement, you might be limited to investing only 10% of your income, but that’s not a bad safeguard to have.
How Much Does Concreit Cost?
Concreit’s app and platform are free to get an account started.
Click here to download the Concreit app today!
Concreit is innovating by providing a low-cost path to invest in private equity investments by allowing investors to directly invest into their offerings without having to pay traditional brokers commissions that could be as costly as 7%.
Concreit only charges an annual 1% asset management fee while giving investors opportunities to go fee-free with their rewards program. Unlike other private equity investments they have chosen to pass through the performance fee to investors as your profit.
There are short-term withdrawal fees that include pass-through ACH fees and potentially an early redemption fee if your funds have been there less than a year. How long you’ve invested your money in Concreit’s portfolios will determine how much it costs to withdraw your funds.
Because they want you to keep your money in their portfolio for the long-term, you’ll pay a lower fee if you have the money in your account for over one year.
If you withdraw funds in less than one year, you’ll pay not only an ACH transfer fee but also an early redemption fee. The program was designed to protect and return 100% of your original investment and only impact your short-term gains (profits within the last 12mo). You will be assessed a fee equal to 1/5 of your short-term gains, which is much more favorable to investors compared to other redemption programs that exist out in the private equity world.
Benefits of Concreit
All investment apps have pros and cons. Let’s look at the upside of using Concreit to invest in real estate.
Incredibly easy to use
Concreit has made it possible for anyone interested in investing in awesome real estate investment opportunities to get started with ease. You don’t have to worry about owning real estate yourself or even vetting the real estate opportunities. Everything is done for you, actively managed by a professional team that spends time writing updates on all the investments for you.
Flexible Dollar Amounts
While we don’t recommend investing with just $1, you can. The more you invest, the more potential return you’ll have. The point is you can invest with as little or as much money as you want. Since you should diversify your investment efforts, it’s a good idea to invest some money in real estate as well as in other investment opportunities that aren’t tied to real estate.
Funds Can Be More Liquid
Like we talked about above, it’s best if you leave your money in Concreit for at least one year, but you don’t have to. If you have an emergency or miscalculated the funds you could invest, there is always the opportunity to sell your shares and withdraw your funds.
Lower Risk
Every investment has risks, so don’t think you are investing in a risk-free asset, but real estate historically appreciates, making it a lot easier to walk away with profits. It’s not fool-proof, though, so always use your judgment alongside the advice the professionals at Concreit offer.
Drawbacks of Concreit
Like all investments, there are also negative sides to investing with Concreit. Here’s what you must know.
Not Insurance – Real Asset-Backed
If you put money in savings or checking accounts, you are covered by FDIC insurance. If you invest money in the stock market, your securities are protected by SIPC insurance but doesn’t protect against loss of value.
With private real estate investing, there isn’t any insurance against loss of value, but depending on the investment type, it can be backed by assets. Concreit in their Cash-Flow fund does generally overcollateralize their investment positions, but there’s no guarantee that it may prevent a loss. If Concreit were to go belly up (like any other private equity investment), you might not be able to get your money back when you want or doesn’t guarantee against a loss all of your investment. They do have a continuity plan, but process could be drawn out.
As some would say, there’s no such thing as a free lunch. It’s really important to understand the risks that come along with investments.
Potentially Limited in How Much You Can Invest
If you aren’t an accredited investor, you can only invest up to 10% of your income or net worth (whichever is greater) because of SEC required limits. While it’s a safeguard to protect you from a total loss, it also tells you what you can and cannot invest, and that doesn’t sit right with everyone.
Concreit may have new offerings in the future which may unlock the ability to invest more and build your ideal real estate exposure.
Has a Short History
If you prefer to use investment apps with a long history and past performance, Concreit isn’t it. The app itself was only released in 2021. The company is backed by some of the best Venture Capital in the world, and while the investment professionals behind it have a lot of experience and could help beginners have a successful real estate investment portfolio, there’s still the risk of it being a relatively new company.
How Concreit Compares
Concreit is one of the newest real estate investment apps, but other online investment platforms exist for private real estate. Here are a few key competitors.
Fundrise
Fundrise requires a much longer holding period of five years, but they invest in much higher value and riskier real estate assets. Fundrise has a minimum $10 investment for their general exposure fund versus Concreit’s $1, but they have higher average annual returns of 9% versus 5.5%. They sit in different areas of risk in real estate, so the question is what are you interested in.
Worthy Bonds
Worthy offers a fixed 5% return for your money while investing in a number of underlying instruments and states they lend money out to other businesses with varying degrees of risk. Worthy is another alternative savings product that provides a slightly lower return profile and offers a very simple to use experience as well.
Final Thoughts
Real estate investments can be a great way to increase your income streams and net worth. Concreit makes it easy to meet your investment objectives with barely any knowledge and work to invest in private real estate opportunities. If you want to earn real estate income and want a hands-off approach to US real estate investments, Concreit can offer the perfect start. If you’re ready to get started, click here to download the Concreit App today!
