Considering broadening your investment horizons with tangible assets? Then Streitwise deserves your attention.
Rather than being a typical real estate crowdfunding avenue – which often carries higher risk – Streitwise is a public, non-traded real estate investment trust (REIT). It offers attractive dividends and the chance for capital growth.
In terms of returns, Streitwise’s REIT performance mirrors that of the long-standing S&P 500. This positions it as an ideal avenue if you’re keen on diversifying from traditional stocks to add commercial real estate to your asset mix.
The behavior of commercial real estate differs from stock markets, often yielding lucrative returns when stocks are plummeting.
Who Exactly is Streitwise?
Streitwise is a digital real estate entity that champions a REIT. Unlike the myriad of real estate crowdfunding platforms which mainly target individual investors for specific real estate projects using equity or loans, Streitwise is distinct.
When you venture into Streitwise, you’re plunging into an equity REIT. Such investments outshine both real estate crowdfunding platforms and straight-up real estate investments. As an equity investor, not only do you receive steady dividends from underlying properties, but you also get to share in the capital gains once properties are sold. Plus, there’s no hassle of direct property management.
Furthermore, REITs have their set of unique advantages. They function similar to mutual funds but focus on commercial properties, from office spaces and retail areas to hotels and sprawling apartment complexes. They usually spread their assets across various geographic areas and focus on income-generating properties.
Tax benefits with REITs are notable too. They’re obligated to distribute at least 90% of their taxable profits as dividends to stakeholders. Often, a chunk of this dividend income gets an offset due to depreciation expense, a non-cash expense that trims taxable profit. REIT investors can enjoy up to a 20% deduction on their dividend income. Plus, when properties are sold, the capital gains tax rate is typically lower.
Launched in 2017, Streitwise is fairly new to the scene. Its non-listed REIT means it doesn’t circulate on public exchanges. All assets within the trust are directly held by the REIT. Holding shares in this REIT translates to indirect ownership of the encompassed properties.
Venturing with Streitwise
Starting your journey with Streitwise involves buying shares of the trust. With the current share price at $10.19 (this varies quarterly), a minimum 500-share investment equates to an investment of about $5,095. Subsequent investments can be made in increments of $500.
Historically, dividends from the REIT, which holds two key commercial properties, have hovered between 8.4% to 10%. This rate is anticipated to be between 8-9% for 2022. These dividends, dispensed quarterly and net of fees, match the S&P 500’s long-term performance, overshadowing fixed-income instruments like bonds or CDs.
Fees and Requirements with Streitwise
The platform charges a 2% annual management fee. Dividends already account for this fee.
A significant barrier on many digital real estate platforms is the need for accredited investor status. Such a designation requires either substantial earnings over the past couple of years or a high net worth. Streitwise, however, welcomes non-accredited investors, with stipulations on the percentage of net worth or income invested.
REIT Redemption Protocol
There exists a one-year “cooling-off” period post-investment during which shares can’t be redeemed. Thereafter, quarterly redemptions are possible via the Streitwise Stockholder Redemption Plan, with certain conditions.
Streitwise’s Investment Approach
With a collective experience exceeding 40 years in real estate, Streitwise’s founders manage the REIT and have substantial personal investments in it. Their strategy revolves around properties that promise value, have reputable tenants, are situated outside ultra-expensive coastal regions, and employ modest borrowing.
Streitwise Platform Features
Key features include a $5,000 minimum investment, various account type compatibility, a dividend reinvestment plan, comprehensive customer support, and robust platform security. Non-US clients can join, although with additional steps.
Pros & Cons of Streitwise
Advantages:
- Open to both accredited and non-accredited investors.
- Minimum investment threshold is $5,000.
- REIT suitable for retirement plans.
- Sound investment strategy and good returns.
- High liquidity compared to other platforms.
Drawbacks:
- Limited diversification with only one REIT and two properties.
- A relatively short track record.
- Restricted liquidity in the short term.
Is Streitwise the Right Choice for You?
Given the stock market’s soaring heights, now might be the time to explore other investment areas, like commercial real estate. Streitwise offers a blend of dividends, capital appreciation potential, and tax benefits. With a manageable minimum investment and a strategy targeting stable, long-term gains, Streitwise stands out as a worthy contender for those seeking diversification and potential growth.
