I set up my account and invested an initial $1,000 into Yield Crowd. I will probably invest more, and decided I loved the YIELD token returns so much I’d write this review as well.
There are only a few Tokenized real estate platforms, and most of them are not really that great. Like other reviewers, I have the sneaking suspicion that most affiliates who write reviews just pick the ones with the highest commissions.
I have experience with several platforms such as Realty Mogul, and because of this I have been able to develop a stringent set of criteria for grading investment platforms which I review.
I have over 15 categories and rank each company from this set of information and weight the responses based on the most important facts. While nothing is perfect, I hope this creates a well balanced review system that leaves you with a good sense of the company reviewed.
With that being said, feel free to check out my information and review below about this company.
I believe that Yield Crowd is a great project. It is for non-US investors only, which is making it popular in the European and Latin American markets.
The minimum investment amount for the Yield Crowd token is $1000 and it is similar to investing in a REIT, except that the value has a pre-defined and non-volatile rate of inflation. Investors can expect a 5% APR weekly dividend payment from the YIELD token and a 3%+ appreciation rate.
When you invest in Yield Crowd, you can choose an investment amount and Yield Crowd will distribute your investment accordingly.
Disclaimer: I was invested in Yield Crowd, and when I first wrote this article it was because I enjoyed my experience with it. After a while of investing, I became an affiliate. If you decide to sign-up for Yield Crowd via my links, I could be compensated a small fee referral fee.
Why Try Tokenized blockchain real estate?
I’ve been excited by the idea of crypto, blockchain and asset tokenization since before 2017. Not only have I thought about ways to tokenized my own investments (though I haven’t got to that level yet), but I’ve also thought about investing in other’s tokenization projects as well.
I have noticed that real estate is so far behind other areas when it comes to the blockchain. Real estate investing is still amazingly arcane with how developers find investors, syndicate deals, and then move forward on projects.
What’s quite amazing about the blockchain, is that literally any company can tokenize their shares and start trading them globally on decentralized exchanges controlled by no central authority or entity. This opens up massive possibilities and is for sure the future of investing, trading, and yield farming. Imagine wall street elite investment banks like goldmansachs and their middlemen brokers being cut out of the IPO process and millions of fees and friction evaporated with them, so that private companies can connect directly with investors in a global, frictionless, blockchain ecosystem.
So, if you are an experienced investor currently and want to diversify or simplify your portfolio, online blockchain token investing is a very interesting place to be. New investors also might find tokenized real estate shares investing the perfect place to start!
How Does Tokenization Work?
Real Estate Tokenization is simply taking shares or bonds as the underlying assets and listing them on the decentralized blockchains so that investors can trade them freely amongst each-other, bypassing the middle-man process and giving companies more cash to spend on operations instead of investment bankers, therefor able to perform better and give investors higher returns. Instead of paying millions ($5m-$25m in average broker/dealer fees) to investment banks and National Exchanges to list them up for trading.
The investors then receive a distribution of the earnings throughout the holding period of the Tokens. They also receive their portion of the appreciation upon resale of the tokens.
This is generally referred to as Syndication in real estate, and was typically done privately between high net worth individuals. But with the JOB’s act under Obama, the ability to broadly advertise the investments became available, although until recently the technology to tokenize and freely trade the shares was not available.
Because these offerings are securities tokens, backed by bonds, in order to remain compliant, Yield Crowd has elected to fall under the SEC regulation S. exemption, by offering the tokens only to non US investors.
What is Yield Crowd and How Does it Work?
Yield Crowd’s YIELD token is a blockchain token investment that allows you to invest directly into a pool of diversified commercial real estate.
As I mentioned, real estate is traditionally very exclusive, and the only investors were those with direct access to the institutions that fund the deals. Yield Crowd is cutting out the middle-man and allowing us to directly invest. Also, by cutting out the investment banks and the institutions, it should reduce the broker fees and expenses and keep investor fees low.
Yield Crowd has created a marketplace that is fairly transparent and their goal is to “make the process of investing in the highest quality commercial real estate from around the country simple, efficient, liquid, and transparent.”
Yield Crowd currently has thousands of members and they have invested in over $50m of real estate. They let you invest as little as $1000 at a time into commercial real estate back YIELD tokens.
What Is Commercial Real Estate (CRE)?
Commercial real estate (CRE) is property that is used exclusively for business-related purposes or to provide a workspace rather than as a living space, which would instead constitute residential real estate. Most often, commercial real estate is leased to tenants to conduct income-generating activities. This broad category of real estate can include everything from a single storefront to a huge shopping center.
Commercial real estate includes several categories, such as retailers of all kinds — office space, hotels and resorts, strip malls, restaurants, and healthcare facilities.
Why invest in commercial real estate?
Dividends.Appreciation.Debt payoff. And tax benefits. When multiple variables work in the investor’s favor, it’s no wonder that commercial real estate has been the number one millionaire creator. In fact, 90% of all millionaires are due in part or total do to real estate.
Investments into the real estate market are dependent on two key factors; the yield and liquidity of the asset. The latter refers to how quick it is to sell off a property at market value upon listing. Compared to other financial market assets such as bonds or stocks, real estate assets are more illiquid and a factor that keeps interested investors at bay. With conventional properties and REIT investments it’s only possible to sell to local buyers due to liquidity and regulatory challenges hence locking out foreign investors.
Private Fund Cost Issues
Private Funds offer investors with an opportunity to buy shares in a property that would have been too costly to purchase as a single investor. Even though it’s a revolutionary concept in helping investors to pool funds together and purchase a property, Private funds typically attract hefty fees, large minimums of $10,000 to $250,00, and lockup periods of 7–10 years, which can be unfeasible to many investors.
Transacting in the real estate market is very complicated which requires interaction with various parties to have a successful deal. It is more complicated if it involves overseas operations as both parties must have an understanding of cross border transactions, legal, regulation, and compliance challenges along with the local market conditions.
The YIELD Solution
YIELD is a blockchain based Token allowing participants to trade the digital assets in a peer to peer model. The Token is built on top of the Stellarblockchain allowing users to transfer assets in a secure, fast and near zero cost. The Company is building a Token with the objective of addressing the pain points highlighted above as well as with the goal of delivering more value to its investors and token holders.
Why Tokenize Real Estate?
The Company understands the challenges facing the real estate industry not only in the U.S. but across the world. Placing real estate assets on a blockchain allows for secondary trading of tokens on decentralized exchanges. This is significant to initiating ease of cross border transactions with a market that operates 24/7 throughout the year. Tokenization of assets like real estate allows fractional ownership which is essential to reducing barriers to entry already apparent in the conventional real estate market. Eventually, this leads to more retail investors taking part in the real estate market who otherwise or initially were locked out because of strict accreditation measures present in the industry. Finally, adopting blockchain technology and smart contracts eliminates third parties which is essential to reducing costs and inefficiencies experienced when operations are under the control of competing entities.
High Net Worth Portfolio
The Company through its key persons including the manager boast of a successful career in the US real estate market. So far, the manager has several properties across the United States with a total estimated value of $50 million USD which will be contributing to the initial listing. In addition, the team is already working with industry developers and brokers, and there is a pipeline of potential projects and deal flow. Investors from all over the world will have access to the highly lucrative investment opportunities available in the US real estate market through the Yield Crowd portal.
YIELD gives users and investors diversification. Investors will have access to multiple different properties backing one token. For instance, retail, residential, commercial, industrial or even hybrid properties.
Decentralized Finance (DeFi)
Building YIELD on top of the Stellarblockchain helps the project maintain decentralization. Using the Stellar decentralized exchange, token holders also take advantage of the DeFi products such as the ability to swap YIELD tokens against other digital assets and vice versa. Additionally, future plans would allow investors and YIELD token holders accessing the Yield Crowd platform to borrow against YIELD as collateral and use these funds to acquire or finance new ventures. Experienced traders may have the future opportunity to leverage the tokens for higher yields.
The Company’s solution to liquidity challenges in the real estate industry are tackled via the introduction of a property swap marketplace. The tokens may be exchanged on the Stellar decentral exchange for the purpose of introducing a secondary market in the industry. Each investor with a tradeable asset on the exchange can easily settle a transaction 24/7 with the option of exchanging one asset for another, for cryptocurrencies or fiat money. The exchange and swap marketplace will help reduce the time spent to sell off real estate backed investments compared to transacting in the traditional illiquid real estate markets.
The Real Estate Fund’s business objective will be to generate alpha investment returns by investing into a diverse group of properties, using the knowledge, relationships, and skill the Manager has developed from the Manager’s prior real estate investment experience. Primary property classes will include Multifamily, Retail, Office, Car Wash, Hotels and Trailer Parks. Properties will be purchased nationally, mostly in major cities in the southern half of the United States, ‘the sunbelt region.’
The Real Estate Fund may also indirectly invest into the income streams of property entities through contracts. The Manager intends to target multiple types of real estate asset classes depending on different factors including the current economic conditions, deal flow, and asset class returns. With the intention to seek the highest return investments while mitigating risk.
The Manager intends to hold some assets for the long term, and some for the short term, depending on what it deems the best strategy for the property, while taking into account such variables such as cashflows, total investment return and velocity of capital. The Manager, in it’s discretion, may also purchase the businesses within the property to boost cashflow.
After an appropriate amount of time and property value appreciation, but before the YIELD Tokens repayment date comes due, the Manager intends to either refinance the properties with new Senior Debt, or refinance by issuing a new Token series, to repay the YIELD token holders in full per the Current Face Value as scheduled in the Olson Bond Fund term sheet.
The Manager intends to target properties with cap rates between 5% and 10%. The Manager intends to target senior loan to value ratios of 50%-80% using traditional mortgage lenders.
How to invest?
It can be a little confusing at first — after all, no one has really done tokenized real estate backed investments before. However, once you get the hang of it, its pretty simple. You can use either XLM crypto or you can use fiat bank wire or swift to invest. After which, you will receive USDC tokens in your account that you can then click the Buy Tokens button and purchase your YIELD tokens with. There are no fees if you use wire or crypto payments. If you use Credit Card there are hefty fees that Visa or Mastercard systems bills the Company, which they pass on to the user.
My experience was that my $1,000 initial investment immediately started accruing interest in my account. Within the first week my dividend was paid out in USDC coins, which I can move to my coinbase or binance account, or transfer directly out of Yield Crowd to my bank account. Instead, I reinvested the dividend back into Yield tokens, so that I could compound my returns. Since then, I have reinvested multiple times. The platform sends an email alerting you when you receive you dividends, and it has a nice feature that shows how much has accrued since the last payout.
What I love about the tokenization approach, is the modern systems, being able to receive dividends daily or weekly, and the easy of which they can be reinvested, or withdrawn in multiple currencies including Fiat and Crypto. The other great thing is that the tokens can be sold for their inflated value, and the investment can be exited at any time — this is not something that any other investment platform that I know of can do.
So far, I have been receiving a little over 5% dividend as promised, and the face value of my tokens has gone up a few percent. My take away is that this company is doing things the right way, and that I will be buying more YIELD tokens as I save more money. This is the future of investing and I think this company will only continue to gather more and more assets and investments in the future.
For more info visit: https://yieldcrowd.com