Updated June 18, 2022

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
Start Investing in Real Estate

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
  • Only 2 properties so far
  • 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 (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.

There's one current REIT offering that 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 and consistent dividend payouts
  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 who don't want their money tied up for years. Check out Groundfloor instead.
  • 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: Since 2017, Streitwise has averaged a 9.3% annual dividend.[1] 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. Tryperion's past investments have had 30.3% IRR
  • 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.
  • $5,000+ Minimum: This could be high for small investors. If so, check out Fundrise, which only requires $10 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 seen strong returns since they started in 2017. For 20 straight quarters, they have paid out over 8% dividends (after fees are taken out). The annualized dividend yields from 2017Q2 to 2022Q2 have been 8.4% - 10%.[2]

This 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.

Plus, they have had strong tenant performance. As of February 2022, they have met 100% contractual rent obligations from every tenant in the portfolio.

Streitwise aims to produce a ~10% return through a combination of cash flow and appreciation for investors. However, understand that this is not a guarantee and that past performance is not indicative of future results.

Investment Fees

Streitwise has a very transparent fee structure. They charge:[3]

  • 3% upfront fee: 97% of your investment will go directly towards the REIT, while 3% goes to the Sponsor. This fee doesn't reduce the shares you own. If you start with buying 500 shares, you will still own 500 shares.

  • 2% on-going fee: This is the ongoing annual management fee to compensate Tryperion Partners for managing the investments. This fee includes all associated costs with acquiring and managing the properties (see list below).

The fees may seem high at first glance when compared to other real estate crowdfunding platforms. But unlike other platforms, there are no other hidden fees.

Streitwise does not charge:

  • Acquisition fees
  • Servicing fees
  • Developer fees
  • Construction management fees
  • Financing fees
  • Disposition fees
  • Property management fees

Some real estate crowdfunding platforms advertise low fees, but in reality, the fees still have to be paid somehow. For example, DiversyFund has no platform fees at all, but instead, takes up to 8% fees from the REIT for their operations.

All detailed fees information can be found in Streitwise's Offering Circular.

Investor Requirements

Streitwise's REIT offering is open to both non-accredited and accredited investors. There is no net worth or income requirement.

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).

Minimum Investment

The minimum required investment is 500 shares. As of Q2 2022, this is $5,075 (and is subject to change). After that, you can add investments in increments of $500.[4]

Additionally, investors should be prepared to hold onto their investment for at least 12 months.[5]

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.

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:[6]

  • 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.[7]

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 over $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 founding, but there is no guarantee it'll continue to do so.

Mobile App

Streitwise recently launched an iOS app that allows you to:

  • Add more funds ($500 minimum for additional deposits)
  • View account holdings
  • Enroll in dividend reinvestment
  • Access tax returns

Note that IRA or Trust accounts is read-only. You cannot add funds from the app.

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.

That's great if you want to cherry pick the properties you want to invest in. 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 is the same as Streitwise (both $5,000),[8] 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.

Fundrise vs. Streitwise

Fundrise is another popular private real estate investing platform. It's the better choice for beginners because you only need $10 to start.[9]

A big advantage is that it offers much better portfolio diversification. You're invested in a large number of properties across different sectors (e.g., office, residential, retail, etc.).

Plus, if you invest $5,000, you can pick a more custom portfolio for your goal. You can choose if you want to invest in more dividend properties, growth properties, or a balanced plan.

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

Fundrise only charges you 0.85% in annual management fees[10] (although some of the deals they invest in could incur an acquisition fee of up to 2%).

Fundrise also offers greater liquidity. You can redeem your funds after 90 days. The penalty is only 1% if you redeem before 5 years.[11]

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.

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.

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. ^ Streitwise, Performance & Target Returns, Retrieved 2/8/2022
  2. ^ Streitwise. Performance & Target Returns, Retrieved 6/17/22
  3. ^ Streitwise. Fees, Retrieved 6/17/2022
  4. ^ Streitwise. FAQs: What is the minimum investment?, Retrieved 6/17/2022
  5. ^ "Start Investing Today": Streitwise, 2021.
  6. ^ Streitwise Redemption Plan, Retrieved 2/8/2022
  7. ^ IRS. Tax Cuts and Jobs Act, Retrieved 6/17/2022
  8. ^ RealtyMogul. REITS: What's the minimum investment amount?, Retrieved 6/17/2022
  9. ^ Fundrise. Minimum Initial Investment, Retrieved 6/18/2022
  10. ^ Fundrise. What are Fundrise's fees?, Retrieved 6/18/2022
  11. ^ Fundrise. Are there any costs associated with redeeming shares?, Retrieved 6/17/2022
Streitwise

Start Investing in Real Estate

  • Access to private real estate managed by experienced investors
  • Earn passive income from dividends
  • Open to all investors
Fundrise

Invest in Real Estate with $10+

Become real estate investor with as little as $10

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

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