Streitwise Review 2021 – Is It The Best Commercial Real Estate Platform?
Streitwise specializes in a single, non-publicly traded REIT. They’ve had strong historic returns of at least 8% since their inception in 2017, and they continued their share redemption program during the pandemic, unlike some competitors. Streitwise fees are slightly higher than other private REITs with a 2% management fee, but they have a very transparent team and the management team has $5 million invested, so you know they have a stake in the success of their offering.
At a Glance
What we like
- Management has skin in the game
- Investor transparency
- Open to nonaccredited investors
- Strong historic performance
What Needs Work
- Highly illiquid
- Slightly higher fees
- Limited offerings
- Nonaccredited investors
- IRA holders
- Individual investors with more disposable income
Streitwise is a commercial real estate investing platform that’s open to nonaccredited investors. They’re one of several platforms that have popped up in recent years, and with so many choices, it’s hard to decide which is the best for you.
My Streitwise review will break down all the details you need to know about before investing with Streitwise. You’ll learn how they are different from crowdfunding sites, their fees, performance history (including pandemic returns), and how they compare to their top competitors.
It’s an exciting time if you want to invest in commercial real estate, so it’s important to read about all of the options and risks before proceeding.
Streitwise Review 2021 | Is It The Best Commercial Real Estate Platform?
Streitwise is a real estate investment company specializing in real estate investment trusts (REITs ) — which is why their name is spelled with REIT. They were founded in 2017 by the private real estate investment firm Tryperion Properties.
You’ll need a minimum investment of about $5,000 because they require investors purchase at least 500 shares. The share price is based on that quarter’s NAV.
An important distinction to make from the start is that Streitwise is not a crowdfunded real estate platform like Fundrise or RealtyMogul. That means you’re not investing in private properties with a group of other investors. Investing with Streitwise means you’re buying shares of their REIT, and they currently offer a single REIT called 1st Streit Office. At the time of this Streitwise review, 1st Streit Office is made up of two class A commercial properties, and there’s the potential to add additional properties in the future.
This is a nontraded REIT, and Streitwise’s sponsor Tryperio Partners, says they have over $5 million “skin-in-the-game.”
What are REITs?
Because REITs are the only offerings you’ll find at Streitwise, it’s important that you understand what they are and how they work. Like I’ve said, REIT stands for real estate investment trust). The first REITs were created back in 1960 as part of the Cigar Excise Tax Extension. The purpose is to allow all investors (not just incredibly rich ones) to invest in income-producing commercial real estate.
There are publicly traded REITs and shares, bought and sold like stocks on an exchange, and there are also private REITs, like the one Streitwise offers. Private ones have been around longer than the 1960’s, but they weren’t available to individual investors. The JOBS (Jumpstart Our Business Startup) Act of 2012 is what made REITs available to private investors.
There are two main categories of REITs: equity and mortgage, or debt. Streitwise specializes in equity REITs, which means they own, operate, or finance income-producing properties. Mortgage REITs generate revenue through interest earned on properties.
When you invest with Streitwise, you’re buying shares in their portfolio of holdings. As a result, you benefit from its earnings, which are paid out in dividends and potentially capital gains if the value of the holding increases.
Streitwise performance during the pandemic
We’ve all seen how the pandemic has rocked financial markets. It’s changed how people live and work, and there are questions about the viability of commercial real estate during a time when many companies have decided to send workers home indefinitely.
Streitwise performed well during the pandemic despite those concerns. They’ve collected rent obligations for every tenant in their offering, and they offered rent relief for three tenants total.
They’ve also met their goal of at least an 8% dividend yield during the pandemic, and they’ve also continued their redemption program despite competitors, like Fundrise, temporarily suspending their program.
Tryperion Partners, Streitwise’s sponsor, has over $5 million invested in their offering. Having that kind of skin in the game is important, and lets investors know that Streitwise makes decisions that won’t solely affect individual investors.
As far as continuing to invest in commercial real estate, Stretiwise says they “believe targeting secondary urban-suburban markets can be beneficial to investors in the future” because many organizations will continue to have requirements for physical office space.
Streitwise also says that they focus on Class A properties that offer a certain lifestyle for “workers who desire an easily accessible central location surrounded by activities and amenities.”
How to invest in real estate with Streitwise
Streitwise requires investors purchase a minimum of 500 shares. That equals about $5,000 and is based on the NAV (net asset value) or price of each share at the quarter. You do not need to be an accredited investor for Streitwise.
The process of joining as an investor is fairly straightforward. First, you’ll need to provide your legal name, how much you want to invest, and how you’ll fund your investment (ACH or wire transfer).
Streitwise will also need your address, phone number, and social security number. Then you’ll need to share details about your income and net worth, which is used to limit to how much you can invest.
After Streitwise has received funds for your account, that money will sit in an escrow account for about 10 days before it’s cleared. Streitwise typically invests mid to end of the month, so that’s when you’ll be issued your share. You’ll receive email confirmation letting you know that you’re good to go.
You can check in to see how your account is doing through the Streitwise app or web platform. They issue quarterly reports so you can see how well the portfolio is performing, and this is also when you’ll earn quarterly dividends.
Streitwise dividends yield returns have been over 8% since 2017. And even during the pandemic, their dividends have been over 8%, with 8.4% returns in the second quarter of 2021.
Streitwise pricing and fees
In general, REITs have higher fees than other types of tradeable assets, like stocks or ETFs. And Streitwise is no different. Here are the fees you can expect:
- 3% for organizational and offering costs: This is an upfront fee, one-time fee that is based on the total proceeds generated from the offering. It goes to reimburse Streitwise’s sponsor Tryperion Partners.
- 2% annual management fee: Streitwise uses their sponsor, Tryperion Partners, to manage and oversee operations, and this 2% fee is for management and operational expenses.
Streitwise doesn’t charge acquisition, servicing, special servicing, financing, or disposition fees.
I mentioned that REITs usually have higher fees than stocks and ETFs, and you can see that with the annual management fee alone. For example, a robo-advisor like Betterment only charges an annual management fee 0.25%, but you have to remember that REITs are very different.
It’s also worth noting that you will be charged these fees no matter how well the REIT performs.
Stock Redemption Plan
Non-publicly traded REITs are notoriously illiquid. These are long-term investments, and this is something you’ll need to consider if you want to invest with Streitwise or any of its competitors. And it makes sense if you think about it -- these companies are trying to fund and realize major developments. They can’t have investors pulling money out whenever they want.
You can redeem the full value of your shares after 5 years, but they have a tiered Stock Redepemtion Plan if you want to redeem your shares before the 5-year mark.
However, Streitwise has a Stock Redemption Plan that allows investors to redeem their stock shares before the 5 years are up.
You can see their redemption schedule below, and note that no redemptions are allowed before the 1-year mark.
NAV stands for net asset value, so if you want to redeem shares after 2 years, you’ll only be able to redeem them for 92.5% of the full NAV.
Streitwise only allows a certain number of redemptions each quarter, and once their maximum is met, they may allow redemptions on a pro-rata basis.
Dividend reinvestment plan
You may have heard of dividend reinvestment programs (or DRIP) when referring to automated stock investing apps, but Streitwise also has a program. When you sign up for it, Streitwise automatically reinvests your dividends in its REIT. This is an optional program, and it’s designed to help you increase your holdings.
Multiple account types
Streitwise is set up to allow individual investors, but they also allow you to invest through your IRA or other tax-deferred retirement accounts, trust, or as a company.
Invest using cryptocurrencies
Streitwise allows investors to fund their investment with more than just USD. You can now invest using Bitcoin or Ethereum.
Streitwise vs. Fundrise vs. RealtyMogul
Fundrise and RealtyMogul are two of Stretiwise’s main competitors. Streitwise is different from them in one main way: the REIT 1st Street Office is their only offering. RealtyMogul and Fundrise also offer individual property investments, but these do require a much higher initial investment and investor accreditation.
Below you can see how Streitwise compares:
Open to nonaccredited investors?
Streitwise review: Pros and cons
- Management has skin in the game: Streitwise management and sponsors have $5 million invested in this REIT
- Open to non-accredited investors: As long as you can meet the $5,000 minimum investment, all are welcome at Streitwise
- Strong historic performance: REITs are risky, and there’s no guarantee of performance. However, Steitwise has seen returns of at least 8% since its inception, even during the pandemic.
- Transparent team: You can easily find SEC filings, circulars, and reports on the Stretwise website. These are accessible even if you aren’t yet an investor.
- Only one offering: Streitwise only has one REIT, and they don’t offer private property investments.
- Slightly higher fees: The 2% management fee at Streitwise is higher than some competitors.
- Highly illiquid: There is a 1-year lock-up period when you cannot redeem your shares, and your shares are only 100% redeemable after 5 years.
Streitwise review: The final word
Streitwise isn’t a crowdfunded real estate platform -- it’s an REIT. And they currently only have a single offering. However, their REIT has performed well historically, with returns running from 8% to 10% since its inception in 2017, and they managed to meet investors’ expectations during the pandemic.
Sharing is caring!
Posted in: Make More Money
About Millennial Money Man
Bobby Hoyt is a former band director who paid off $40,000 of student loan debt in 18 months on his teaching salary and then left his job to run Millennial Money Man full-time. He helps other Millennials earn more through side hustles, save more through budgeting tools and apps, and pay off debt. He is a personal finance expert who has been seen on Forbes, Reuters, MarketWatch, CNBC, International Business Times, Business Insider, US News, Yahoo Finance, and many other personal finance and entrepreneurship media outlets.