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I can’t claim to be an expert on these (who can given their short tenure), but as a consultant I will gladly offer my opinions...in summary, OP if you are going to get involved in these, do your research 10x over for what you would do for a more traditional investment as this is essentially a buyer beware market full of shenanigans hidden behind an admittedly beautiful tech platform and heavy marketing campaign.
1. These are essentially entry points (thanks to the jobs act) into a clouded, private market typically reserved for accredited investors (I.e., you have enough $ for the regulators to say hey if you are willing to bet that much then you can navigate the risk of poor choices, fraud, etc. on your own). You’re essentially investing in non-traded, illiquid assets with fee structures meant to obfuscate true cost, with limited ability to validate their marketing claims and performance given their short track record and heavy dose of referral-based (incentivized) positive reviews. If you’ve built an emergency fund, maxed out all of your tax-advantaged accounts, set up lower risk savings/bonds to get you to near-term financial goals, have a diversified taxable investment account growing steadily, and a general aversion to any other asset classes then yes maybe throw some money into one of these tech platform ponies and see how it shakes out over the next 5 years as CRE potentially tightens while your investment is locked into an asset that you cannot liquidate in short order. Just remember while you’re hoping your knowledge of commercial deal-making helped you pick winning properties from the pretty pics/vids/limited info you’re presented on their platform you’ll find yourself paying fees regardless of what your asset is doing...asset mgmt fees, advisor fees, front and backend loads (market value vs. unverifiable NAV), redemption fees, and a whole slew of other cleverly worded fees stuffed into their hundreds of pages of prospectuses. It will be interesting to see what happens with investments previously made with RealtyShares, another real estate crowdfunding platform that was touted in 2018 before closing down to new investment late in the year due to unsustainable growth and poorly managed operations.
2. No, self-directed IRAs would not be set up through your employer. These used to only be available to accredited investors (high net worth) at most reputable brokerages given the risk associated with “self-directing,” but there has been a recent uptick in smaller shops touting a self-directed IRA as a means to tap into tax-advantages alternative investments. Generally speaking, not the best idea as you will get gouged with fees and restrictions in setting up your self-directed IRA to work with any of your crowdfunding platforms or for directly investing in real estate. Self-directed IRAs have proven more effective when wanting some tax relief in other alternative investments, such as acting as a lender for businesses or real estate developers, etc. Again, additional hoops to jump through, along with more restrictions to be aware of.
Thank you for the detailed reply. I was reluctant anyways but will definitely research more.
Great reply. Thanks for the time taken to put that together.
1. Anyone into this and have opinions?
2. Thoughts on self-directed IRA and is this something I can setup through Accenture (or is it employer agnostic)?
You can set up a self-directed IRA through Accenture specifically, if you call the vendor they use for retirement benefits and ask for more info. It's not automatically set up for you but is offered (in the fine print). I would be wary of any associated fees.