May 12, 2021

Streitwise Review

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Streitwise offers private REIT investing to unaccredited investors. Find out if it's a good investment and how it compares to Fundrise and Diversyfund.

Streitwise
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Overall Score

3.8

Annual Fee

3.5

Minimum Deposit

3.5

Ease of Use

4.5
5-point scale (the higher, the better)

Pros and Cons

  • Professionally managed investments
  • Above average performance
  • Open to unaccredited investors
  • Low liquidity
  • Can't choose your investments
  • Higher minimum investment

Bottom Line

Private REIT with strong returns for long-term investing

Think private REITs are just for high-rollers?

Streitwise is here to change that.

They give everyday investors access to private commercial real estate investments without the typical hurdles.

Find out if Streitwise is worth the minimum investment in this review. Plus, see how it stacks up in a detailed comparison to other big real estate investment platforms.

What is Streitwise?

Founded in 2017, Streitwise is a private real estate investment trust (or, REIT). What's unique about Streitwise is that it's open to both unaccredited and accredited investors.

They rent out commercial office buildings to high-quality corporate tenants. Streitwise then passes the rent they collect back to investors in the form of dividends.

It's different from similar real estate crowdfunding sites because you can't use their platform to pick and choose specific buildings to invest in. Instead, you are investing in Streitwise's portfolio, which owns the properties.

Their portfolio currently consists of two large office buildings in Indianapolis and St. Louis, and they plan to use the money they raise to purchase additional commercial properties that fit their investment criteria.

Who is a Streitwise Investment Best for?

Streitwise is best for investors who:

  1. Want to diversify their portfolio outside of stocks and bonds
  2. Are looking for higher yields
  3. Are okay with their investment being "locked up" for a year or more

Private REITS are less correlated with the stock market. This means they can help stabilize your overall portfolio in times of extreme market volatility.

Private REITs often provide better returns than their public counterparts as well because they don't need to bear the regulatory costs of being a public, exchange-traded security.

Streitwise is not good for short-term investors. If you want to invest in real estate but don't want your money tied up for years, check out Groundfloor instead. It's also not good for small investors since the minimum is higher than other REIT platforms.

Is Streitwise a good investment?
If you have at least a one-year time horizon, private real estate can be a great addition to a diversified portfolio. Streitwise offers good exposure to this space with below-average fees and a strong, although short, historical performance record.

How Does Streitwise Work?

Streitwise is similar to public REITs, except they raise their capital via crowdfunding instead of through the public equity markets.

Once Streitwise collects capital from its investors (that's you), your capital is put to work.

Streitwise works with Tryperion Partners, an experienced private real estate investment firm based in Los Angeles, to manage their portfolio. They:

  • Research and acquire commercial properties
  • Manage the properties
  • Find high-quality, reliable tenants
  • Collect monthly rent payments

You get returns in the form of quarterly dividends (historically 8-9%) and in the case of potential appreciation in asset value.

Can you make money investing on crowdfunding sites?
Investors can potentially make above average returns investing via crowdfunding sites (if they do their homework and identify a good opportunity) because they are being compensated for less liquidity and have access to investments that aren't on the public exchanges.

Pros and Cons

If you're thinking about investing in Streitwise, review the below pros and cons first before your money is tied up.

Pros

  • Performance: The Streitwise portfolio only has a few years under its belt, but has averaged a 10% annual dividend so far. This is considerably better than most public REITs.
  • Management: The portfolio is managed by Tryperion Partners, which have extensive experience in private commercial real estate, managing more than $5 billion worth of real estate.
  • Proven Properties: While Streitwise will be using the funds to acquire more properties, they already have two commercial buildings generating income for the portfolio.
  • Leverage: Streitwise targets a relatively conservative leverage of 40-60% once the portfolio is complete. This senior secured debt, which results in a lower interest rate.
  • Retirement Accounts: Streitwise will also allow you to invest through your self-directed IRA.
  • Dividend Reinvestment: Streitwise has a DRIP program, which helps to grow your investment.

Cons

  • Liquidity: As with most private investments, you are committing your capital to Streitwise for at least one year. After that, there is an option to redeem early, but at a penalty. After 5 years, you can redeem without penalty.
  • Control: Investors don't get to choose the properties they are investing in.
  • $2,522.50 Minimum: This could be high for small investors. If so, check out Fundrise, which only requires $500 to start.
  • Range: As of now, Streitwise only has 2 properties in their REIT offering.

Has Streitwise piqued your interest? Review the historical returns and fees below.

Streitwise Dividend History and Returns

Streitwise has only been running their portfolio since 2017, so they don't have a long track record for us to analyze and compare to similar REITs.

But for the few years that they do have, their returns have been strong.

Their annualized dividend yield has always been between 8.4% and 10% (after fees), which compares very favorably to the 3.3% average yield currently offered by most public REITs and the 1.5% yield on the S&P 500.

Investment Fees

As is typical of private investments, there is a 3% front-end load fee that you pay when you invest. This fee doesn't reduce the shares you own.

Then, there is an ongoing 2% management fee that comes out of the portfolio each year to compensate Tryperion Partners for managing the investments.

Streitwise does not charge:

  • Acquisition fees
  • Servicing fees
  • Financing fees
  • Disposition fees

All detailed fees information can be found in their Offering Circular.

Investor Requirements

In the past, these types of investments would only have been available to accredited investors (individuals with a net worth of at least $1M or an annual income of at least $200,000).

Luckily, you don't need to be an accredited investor to invest with Streitwise.

However, the SEC still limits the amount non-accredited investors can invest in private funds each year to 10% of your income or net worth, whichever is greater (excluding primary home).

How to get started with Streitwise?
Investing with Streitwise is easy - they'll ask you for the same personal information you'd need to set up a brokerage account in addition to your W2/tax information. This is to confirm you're eligible to make a private investment.

Minimum Investment and Time Horizon
The minimum required investment is 250 shares. Currently, this is $2,522.50 (and is subject to change). After that, you can add investments in increments of $500.

Additionally, investors should be prepared to hold onto their investment for at least 12 months.[1]

Liquidity and Withdrawing Funds

Streitwise has a one year lockout. This means you cannot withdraw any funds within one year. After that, if you so wish, you have the option to redeem shares quarterly through the Stockholder Redemption Plan.

The penalties for redeeming shares are:[2]

  • Less than 1 year: No redemption allowed
  • 1 - 2 years: 10%
  • 2 - 3 years: 7.5%
  • 3 - 4 years: 5%
  • 4 - 5 years: 2.5%
  • 5 or more years: No penalty

How Your Investment is Taxed

Your dividends are taxed as follows:

  • Dividends from current earnings: taxed as ordinary income
  • Capital gain dividends: taxed at long-term capital gain rates
  • Return of capital dividends: not taxed, and can reduce your tax liability

One big advantage is that Streitwise's REIT qualifies for a 20% deduction on dividends earned, as per the 2017 Tax Cuts and Jobs Act.

In addition, REITs are not taxed at the corporate level, so you avoid double-taxation of corporate and personal income tax.

Is Streitwise Safe?

Streitwise's REIT offering is regulated by the Securities and Exchange Commission (SEC). They must follow strict reporting requirements and disclose financial and management information.

The 3 founders are real estate investors and have a total of 500,000 shares (approx. $5 million) invested in the REIT themselves. So they have a lot of skin in the game and are motivated to make the best investment decisions.

But as with all investing, there is risk. Streitwise has done well since its establishment, but there is no guarantee it'll continue to do so.

Streitwise Competitors

Depending on your personal investor profile, you may consider other online platforms offering private real estate investing. See how Streitwise compares to popular platforms below.

Realty Mogul vs. Streitwise

Realty Mogul is another crowdfunding real estate investment platform with a few key differences to Streitwise.

RealtyMogul has 2 REITs available to all investors (no accreditation needed). Accredited investors have access to private placements. You can choose individual properties to invest in.

That's great if that's your investment style and allows you to diversify your real estate investments, but the drawback is you don't have an experienced real estate investment firm making these decisions for you.

Realty Mogul's REIT minimum required investment ($5,000) is twice that of Streitwise, but their time commitment is shorter (six months). Their annual management fee is also much lower, falling between 1% and 1.25%.

A big reason Realty Mogul can offer a lower fee is because they haven't hired a professional real estate investment firm to select their properties like Streitwise does.

 RealtyMogulStreitwise
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RealtyMogul

Streitwise

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Access Private Market Offerings - Learn More

SPECIAL OFFER
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Benefits and Features

Annual Fee
1% - 1.5%
2% annual management fee. No hidden fees
Minimum Deposit
$5,000
250 shares at the NAV price (currently $2522,50 minimum and subject to change)
DividendsMonthly or quarterly payouts or auto reinvestChoose quarterly payouts or auto reinvest
Investment TypesCommercial, multifamily, office, industrial
Commercial office buildings
Wealth RequirementsNon-accredited investors are eligible to invest in the REIT offerings; Accredited investors have access to private placements
None
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Fundrise vs. Streitwise

Fundrise is another popular private real estate investing platform. In 2015, they launched the eREIT, which is essentially an ETF or mutual fund that holds a diversified mix of real estate investments.

They offer three different eREITs, each one tailored to a specific mix of dividend income vs. longer-term capital appreciation.

A big advantage of Fundrise is that it offers much better portfolio diversification because the eREITs invest in a larger number of properties across different sectors (e.g., office, residential, retail, etc.).

Streitwise only invests in a couple of commercial office properties and so their risk is much more concentrated.

Fundrise will also let you invest with as little as $500 and they will only charge you 1%/year in management fees (although some of the deals they invest in could incur an acquisition fee of up to 2%).

Fundrise also offers greater liquidity, allowing you to redeem your funds after 90 days with a redemption fee that starts at 3% but drops to 0% once your investment reaches its fifth year.

 FundriseStreitwise
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Fundrise

Streitwise

SPECIAL OFFER
Invest in Real Estate with $500 - Learn More

SPECIAL OFFER
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Benefits and Features

Annual Fee
1% management fee
2% annual management fee. No hidden fees
Minimum Deposit
$500
250 shares at the NAV price (currently $2522,50 minimum and subject to change)
DividendsChoose quarterly payouts or auto reinvestChoose quarterly payouts or auto reinvest
Investment TypesCommercial, single family, industrial
Commercial office buildings
Wealth Requirements
None
None
 Visit SiteVisit Site

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Terms Apply. Offering Circulars 

Is Fundrise a safe investment?
Fundrise and private real estate in general have delivered strong returns over the past several years, but real estate investing still bears considerable risk. Positive historical returns cannot be used to predict future performance, and no Fundrise investment is ever guaranteed.

Diversyfund vs. Streitwise

While Streitwise's niche is commercial office properties, Diversyfund is a non-traded public REIT that invests strictly in urban and suburban multi-family residential properties to generate rental income.

By focusing their effort in this specific area, management has been able to develop expertise in this real estate market and deliver strong historical returns.

There are a couple of downsides. Diversyfund automatically reinvests your dividends, with no option for cash-out. And there is no early redemption program. You just stay invested until the project is sold (approx 5 years).

Once a property is sold, the investor receives their principal back and a guaranteed 7% return, but if the property is sold at a profit, that profit is shared (65/35 investor/Diversyfund) until you average a 12% return (and then any profit beyond that is shared 50/50).

Similar to Streitwise, Diversyfund appeals to a large number of investors because they do not require you to be accredited and will let you invest with as little as $500. Diversyfund is not for everyone though, and if you're looking for regular dividends, you should go with Streitwise.

 DiversyFundStreitwise
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DiversyFund

Streitwise

SPECIAL OFFER
Earn Passive Income with Real Estate - Learn More

SPECIAL OFFER
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Benefits and Features

Annual Fee$0. No management fees and no commissions2% annual management fee. No hidden fees
Minimum Deposit
$500
250 shares at the NAV price (currently $2522,50 minimum and subject to change)
Dividends
Automatically reinvested
Choose quarterly payouts or auto reinvest
Investment Types
Apartment buildings and condos
Commercial office buildings
Wealth Requirements
None
None
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Start Investing in Real Estate

Which is better: Diversyfund or Fundrise?
Whether Diversyfund or Fundrise is a better choice depends on your investment goal. If you are okay with not receiving any cash flow from your investment for a few years and want 100% exposure to the residential market, you might consider Diversyfund. But if you like receiving quarterly dividends and want a more diverse REIT investment, Fundrise is the better choice.

Roofstock vs. Streitwise

Roofstock offers investors a more direct path to investing in residential real estate. Their platform brings together investors like you and owners of properties currently rented out who are looking to sell them.

With Roofstock, you get to browse all of the properties and their relevant stats (e.g., location, size, rental income, etc.) and if you like one, you literally buy it.

Only serious investors with some real estate knowledge should consider Roofstock because you are putting so much money into a single property that you really need to do your homework and make sure you know what you're buying.

There are financing plans, and you can find a professional manager to help you manage it. But keep in mind that just like owning a rental property, you should keep extra cash in hand as you'll be responsible for paying your prorated portion of any necessary maintenance work.

Besides any regular maintenance costs, there is a small 0.5% fee you'll pay upon purchase of a property. Then you start generating a monthly income stream as the rent checks come in.

Roofstock can be a good idea if you like knowing exactly what you own and have some real estate experience, but it's probably not for the passive investor who doesn't want to actually have to deal with tenants and property upkeep.

 RoofstockStreitwise
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Roofstock

Streitwise

SPECIAL OFFER
Build Wealth Through Real Estate - Learn More

SPECIAL OFFER
Start Investing in Real Estate - Learn More

 

Benefits and Features

Annual FeeNo platform fee. Buyers pay 0.5% transaction fee for each purchase or $500 (whichever is greater)2% annual management fee. No hidden fees
Minimum DepositHouse down payment usually requires at least 20% of purchase price250 shares at the NAV price (currently $2522,50 minimum and subject to change)
DividendsRental income from your propertiesChoose quarterly payouts or auto reinvest
Investment Types
Single family homes
Commercial office buildings
Wealth Requirements
None
None
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Build Wealth Through Real Estate

Start Investing in Real Estate

Bottom Line: Is Streitwise Worth it?

We think any investor looking at the real estate space should consider Streitwise. Their small portfolio of hand-picked commercial office buildings is managed by an experienced team of real estate professionals with a strong track record.

And for the few years that Streitwise has been running their portfolio, they've managed to deliver a strong and consistent dividend that rivals anything we've seen in the public REIT space (all while keeping leverage at a reasonable level).

References

  1. ^ "Start Investing Today": Streitwise, 2021.
  2. ^ Streitwise Redemption Plan, Retrieved 5/10/2021

Write to Andrew Fitzgerald at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

Read Next:

Real Estate Crowdfunding

Real Estate Crowdfunding

How to Become a Real Estate Investor

How to Become a Real Estate Investor

Fundrise Review: Is It Legit?

Fundrise Review

Roofstock Review

Roofstock Review

DiversyFund Review

DiversyFund Review

Passive Income Ideas to Escape the Daily Grind

Passive Income Ideas


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