Today, we are bringing you a complete stREITwise review with everything you need to know about investing in commercial real estate.
stREITwise Review: Private Real Estate for Accredited and Non-Accredited Investors
Getting started in the real estate investment market can be hard, especially if you are new to the game. So many questions and professional terms, and so little answers. However, if you have always wanted to diversify your investment portfolio, stREITwise could be a thing for you.
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Is stREITwise a good investment? How does it work? This stREITwise review goes deep into the company’s capacities and brings you important information.
With this helpful guide, you will learn all about stREITwise pros and cons, fees, stREITwise dividend history, and decide if this is the best financial management tool for you.
Welcome to the world of stREITwise investments.
What is stREITwise?
stREITwise is a popular real estate investment company that combines new federal regulations and innovative technology. With a low investment minimum of $1,000 and low fees, stREITwise is revolutionizing the market and making real estate investing accessible to everyone.
Since its opening in 2017 in Los Angeles, the company has become popular among accredited and non-accredited investors. It has also delivered an annualized 10% dividend return to investors.
However, you should have in mind that stREITwise is not a real crowdfunding platform unlike many other current online real estate investing platforms.
stREITwise is a REIT, which is a liquid type of investment with many advantages over the competition. Just imagine operating as a mutual fund, including the tax advantages, choice of different properties, and many other benefits that sets them apart from the rest of the market.
As you will see in this stREITwise review, the company combines experienced management, quality commercial properties, and the lowest fee structure among real estate crowdfunding sites.
The numbers say it all.
How does stREITwise work
stREITwise is a real estate investment trust, which invests in cash-flow and commercial real estate. This way, their investors can see the benefits of cash flow throughout the circle of the investment. All the investments in REIT are directly owned by the REIT.
You will have ownership of shares in REIT and will be a partial owner of the properties the REIT owns.
Moreover, stREITwise’s dividend history has a compelling return of 10%. In the chart below you will find a dividend yield comparison of stREITwise dividends and public alternatives.
All about investing with stREITwise
stREITwise is a REIT accessible to everyone. It has very low and transparent fees. The minimum amount of investment is $1,000 and your initial investment is locked up for at least one year. During that period, you will not be able to redeem your shares.
However, after that, you can redeem them on a quarterly basis and participate in the stREITwise Stockholder Redemption Plan. This plan enables you to buy up to 90% of the net asset value after one year, rising in gradual increments to 100% after five years.
More information can be found in their offering circular.
The company is led by three founders, with a combined 40 years of experience in real estate investing. Not only do they manage the REIT but they also have direct ownership of each investment.
Currently, they have $5 million invested in the REIT. But what kind of investment strategy stREITwise use?
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1. Value-Oriented Investments
Firstly, the company is interested in specific properties with high-quality construction. Their targets are properties that are located close to transportation, nearby amenities, and established industries.
2. Non-Gateway Markets
Furthermore, stREITwise focuses on non-gateway markets, which are reasonably priced at higher capitalization rates. Those markets have a higher dividend yield and aren’t located in high-priced coastal locations.
3. Modest Leverage
stREITwise also tries to minimize the risk of each individual investment. That is why they only use modest leverage between 40% and 60% of the greater cost of the property.
This way, they protect the investment and maximize flexibility.
4. Creditworthy Tenants
stREITwise aims to gain and manage a diversified portfolio of values. They are oriented towards creditworthy tenants that provide steady and growing dividends.
Their current offering is the 1st stREIT Office holding two properties, suitable for both accredited and non-accredited investors:
- Panera Bread HQ, an office park located in Sunset Hills, St Louis, Missouri. This is a $44 million deal with 55% leverage
- Allied Solutions, a retail and office park located in Caramel, Indianapolis, Indiana. This is a $32 million deal with 55% leverage
It provides a diversified portfolio of quality office buildings. With the investment to date, the 1st stREIT office has made 10% annualized dividends.
stREITwise is also in the process of gaining more high-quality office properties, as their main goal is to obtain a quality and well-diversified portfolio.
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stREITwise Fee Structure
There is a big difference between other real estate trusts and stREITwise when it comes to the fee structure. Many REITs charge 15% of an upfront fee, along with financing and asset management fees, as well as disposition and acquisition fees.
The first one is an upfront fee of 3% when you purchase your shares. After that, there is 2% of the ongoing annual management fee.
Here’s what these fees are paid for:
- An upfront fee of 3% is for the organization and offering expenses
- The annual fee of 2% goes to manage the fund
Keep in mind that investor ownership in the fund is defined by your NAV (Net Asset Value). The shares you own multiply that value. This way, you will own 100% of the proceeds.
If you ask yourself where is that 10% of return, don’t worry. A yearly current dividend distribution of 10% happens after the fees have been removed.
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Who can invest with stREITwise?
stREITwise could be the investment you’ve been looking for. The company is looking for investors interested in passive income, recurring cash flow, high returns, inflation protection, and portfolio diversification.
It is a good real estate investment for different types of accredited and non-accredited investors:
Newbies to REITs
All the inexperienced investors just starting in the real estate investing market could find stREITwise low fees and transparent investments very appealing.
stREITwise is a good option for accredited investors. However, there are two things you need to have in order to be one of the accredited ones:
- Net worth over $1 million, either alone or with your life partner (excluding the value of your primary residence)
- An annual income of more than $200,000 (or $300,000 with your life partner) in each of the prior two years
Investors looking to diversify
The minimum investment of $1,000 offers a good way for all those who are looking to diversify their investment portfolio.
stREITwise makes a great option for non-accredited investors with less than $1 million net worth or less than $200,000 annual income.
All those non-accredited investors can invest in an individual or joint net worth (a personal residence does not count). The other option is to invest individual or joint income from the previous two years. You can also invest an additional 10% of the net worth’s value.
If you are living outside of the United States but would like to invest in stREITwise, feel free to contact them for more information. They have a specific process of approving international investors.
However, it is good to know that just like in any other investment; there is no guarantee of safety. Past results are no guaranty for future performances. stREITwise team is doing the best they can to minimize the risk for each investment.
They process all their documents electronically on their website. They also follow guidelines established by the Securities and Exchange Commission (SEC).
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stREITwise Pros & Cons Analysis
stREITwise features numerous advantages and several disadvantages. This stREITwise review brings you a complete analysis of the company’s pros and cons.
1. Very low minimum investment
stREITwise requires a minimum investment of $1,000, which is way lower than in other real estate investment trusts. You can also make additional investments in $500 increments.
2. Consistent yield
Since its foundation in 2017, stREITwise has a dividend yield of 10% on an annual basis.
3. Low and transparent fees
Unlike other REITs, stTREITwise has only two types of fees. The upfront fee of 3% on your initial deposit and a 2% ongoing management fee. Fees are withdrawn before dividends are paid out.
4. Dividend reinvestment
The dividend reinvestment plan (DRIP) offers you the option to elect your dividends to purchase additional shares in REIT.
5. Platform security
All investment documents are stored electronically through stock transfer services, which are secured.
6. Modest leverage
The company uses leverage in the 40% to 60% range, which minimizes investment risk and maximizes flexibility.
7. Equity REIT
The equity REIT offers dividend distribution as well as capital appreciation of properties.
8. High liquidity
Thanks to the Stock Repurchase Plan, you will be able to redeem 90% or more of your investment after holding your investments for at least one year under the Plan.
9. Accessible for accredited and non-accredited investors
stREITwise is available to both accredited and small, non-accredited investors.
10. Investment strategy
The company uses a strong investment strategy that is based around low-cost markets that offer high quality and valuable properties. They also target credit-worthy tenants, which generate higher cash flow.
11. Available plans
stREITwise offers plans available for individual accounts, self-directed IRAs, and trusts. Since real estate is a great long-term investment, this is perfectly suitable for retirement plans.
12. Tax advantages
stREITwise also offers several tax advantages. Since you are investing in the REIT, it avoids double taxation and it is not taxed at the corporate level. You also get a chance to deduct up to 20% of your dividends from your taxable income.
In addition, you can use depreciation to reclassify certain dividends and make them from ‘ordinary income’ to ‘return of capital’.
Currently, stREITwise holds a single real estate investment trust with only two investing properties: an office park in St Louis and an office and retail park in Indianapolis.
This creates a lack of real estate diversity.
Short investment history
stREITwise is still a new company on the market, founded in 2017. As a result, it doesn’t offer much of an investment history.
No mobile app
Since we are living in a modern, technological era, a lack of mobile app represents a disadvantage.
Real Estate Crowdfunding vs REIT
Unlike other real estate crowdfunding platforms, stREITwise is a public, non-traded real estate investment trust (REIT). It provides much higher dividends than any other crowdfunding site and has the potential for capital appreciation. There is a reason why it’s one of the best real estate crowdfunding options for non-accredited investors.
Moreover, the REIT is more liquid and completely passive than rental properties. You can redeem your stock after one year of holding investments!
On the other hand, real estate crowdfunding sites seek investments from individual investors in specific projects, using a loan or equity investment. They require you to stay fully invested until the underlying investment has been disposed of, which can take several years.
Even though they have a higher potential return, the risk of losing is much bigger.
As stREITwise is the REIT, it has several advantages over crowdfunding platforms and direct investments in real estate itself. As mentioned in this stREITwise review, several pros and cons need to be considered.
stREITwise Review Conclusion: Is stREITwise a good investment?
stREITwise is a relatively new online REIT that allows investors to access the world of high-priced properties for only $1,000. A strong investment strategy managed by an experienced team, simple fee structure and minimum investment amount, make this company a great financial management tool.
It has numerous benefits over real estate crowdfunding sites and other REIT competitors. It is also a good investment option for both accredited and non-accredited investors.
As the real estate market is constantly changing, a diversifying portfolio is necessary. stREITwise offers great liquidity, consistent yield and reinvestment of dividends. Even though the company is still fresh in the game, the results speak for themselves. Furthermore, investing with stREITwise offers you a chance to invest directly in commercial, high-quality real estate property. This way, you will earn steady dividends from the rental income, and participate in capital appreciation.
Then there is the diversification factor, which also needs to be considered. Especially if you have a portfolio dominated by paper assets, like stocks and bonds. Commercial real estate is a hard asset, as well as resistant to the market cycle of paper assets, specifically stocks.
As a result, your stREITwise investment may produce positive returns even when stocks are in a bear market.
Moreover, let’s not forget about the tax advantages mentioned above, which are another bonus to the mix.
Finally, the decision to invest in the real estate market is personal. It all depends on your preferences and financial possibilities.
As we have already said in this stREITwise review, there is no guarantee for any investment option. However, stREITwise strives to maintain its positive sides, while reducing the negative ones.
How to sign up for stREITwise
stREITwise is available for both US citizens and residents, as well as international investors. The only difference that is made is that international investors should open an account over the phone, with wireless payments enabled.
On the other hand, US citizens should provide basic, personal information. That includes their full name, street address, email, date of birth, telephone number, a dollar amount they plan to invest, etc.
The easiest way is to sign up on their interest list, which is at the bottom of the main page.
Did you find this stREITwise review useful? What are your experiences with investing in the real estate market? Let us know in the comments below. We’re looking forward to hearing from you!
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stREITwise10% Annual Returns
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