We don't blame you if you came across Yield Crowd and disregarded it as yet another scheme that is over-promising returns. Except that in Yield Crowd's case, it is not a mirage. If you come across investments promising an 8.75% return, they are usually a Ponzi scheme designed to get money out of your pockets.
If you want to learn more about investing and making a decent return in today's market, read more about Yield Crowd below.
What Is Yield Crowd?
Yield Crowd is an online platform that allows online investors access to a diversified portfolio of commercial U.S.-based real estate investments. A private corporate backs the company and purchases properties in the following sectors:
Yield Crowd's distinguishing factor is that they issue tokenized corporate bonds, which anyone can freely trade on the Stellar blockchain.
The investment opportunity is currently only available to investors outside the United States. About 2,500 individual users have signed up, choosing from a diversified property portfolio situated across the multiple U.S. States.
How Does Trading Real Estate Bonds on the Blockchain Benefit Investors?
1. Liquid Investment
Usually, real estate is a long-term, illiquid investment. You would typically invest your money and hold the investment for several years. The cost of purchasing and immediately selling physical real estate usually outweighs the returns in the short term.
In the case of blockchain-based trading using Yield Crowd, you can trade your tokens with anyone on the blockchain.
2. Small Buy-in
In the case of physical real estate, you would typically require a significant, upfront investment.
With Yield Crowd, the minimum investment is only $1000.
3. Passive Income
Token holders receive daily payouts, with a minimum payout of $1.
Who Owns Yield Crowd?
Brothers Amariah and Obin Olson are the founders of Yield Crowd. Historically, the company has focused on distressed and value deals for high returns, but highly positive cash-flowing properties stabilize its current and future investments.
Before Yield Crowd, the brothers created Olson Capital Investments. They proved themselves by buying and selling profitable large commercial properties with over $80m of transactions over the past ten years.
How Do I Know That My Investment Is Secure?
Yield Crowd funds the debt taken to purchase commercial property, which means physical assets back investments. As of November 2021, more than $50 million in assets comprise Yield Crowd's investment portfolio. In the case of any default, the assets can be leveraged or sold to pay off investors.
For example, the company's portfolio consists of 129 apartments in El Paso, a car wash worth $12M in Santa Anna, a hotel in Arizona, and others. The portfolio aims to support the cash flow required to finance daily dividends to token holders by focusing on income-producing properties.
In addition, the Forbes Finance Council, an invitation-only community of exceptional business leaders, recently accepted Yield Crowd's founder Amariah Olson. The invite requires an in-depth investigation into the founders' background and experience, lending credibility to Amariah's track record.
What Is the Total Payout?
Yield Crowd aims to pay a 3% face value increase plus 5% interest on your investment in year one. The total return equals 8% in year one. By the 5th year, Yield Crowd is targeting an 8.75% total return.
Of course, as with any investment, there is no guarantee that the underlying assets will continue to rise in value or produce the income necessary to sustain the dividends.
What Fee Does Yield Crowd Charge?
Yield Crowd does not charge any trading or bank fees to the investor. It makes money through the spread of returns generated versus returns paid back to investors. If you use a credit card to fund your investment, you will need to pay a 4.5% charge out of your initial payments.
How To Invest?
Signing up is relatively straightforward.
- Visit YieldCrowd.com and click on ‘Sign-Up.'
- Fill out your details.
- You have to declare that you are not a U.S. citizen and don't reside in the U.S (or are accredited).
- You can then review all the investments available in detail. These include the total offering size, minimum investment required, and expected return. Before deciding, you can also browse through the property's expenses, associated risks, and mitigations.
Can I Redeem or Sell My Tokens?
When investing in one of Yield Crowd's portfolios, you commit to a minimum investment duration. During this time, the only way to redeem your tokens is to trade them with others on the Stellar Blockchain.
Is Yield Crowd Right for You?
Over the past decade, real estate has outperformed most investments handily. In 2022, when stock markets are wreaking havoc, real estate is still a pretty safe bet in most major urban areas in America.
Though, most small investors do not have the funds or the experience to benefit from real estate investments. Hence, online real estate investment platforms like Yield Crowd come into play. They offer a way to gain access to real estate with smaller upfront investments.
Yield Crowd may be an excellent addition to your portfolio if:
- You are based outside the United States and want to invest in U.S.-based commercial real estate.
- You are looking for a small investment and want to be reasonably liquid with your assets.
- You have some experience in or are willing to learn about blockchain technology and how to buy & sell tokens.
- Your portfolio can withstand the high risk of investing in a highly leveraged real estate startup.
There are some risks to know about before you invest with Yield Crowd:
- The liquidity of your investment is directly proportional to the number of worldwide token holders and users of the blockchain. If you have no experience with blockchain technology, do your due diligence and learn about the Stellar blockchain.
- Like any other investment, aim to diversify your portfolio. There is an inherent risk in any investment, and real estate is no different. Only invest what you can afford to lose, and don't put all your eggs in one basket. A general rule of thumb is to have less than 10% of your portfolio in any investment.
- Returns can vary with the state of the real estate market. The 8.5% return is not guaranteed and is dependent on market conditions. Income-producing properties are prone to economic cycles like the recent pandemic-induced office space rental market collapse.
Yield Crowd's blockchain-based real estate investments may be the future of online investments. The company has a solid management team with a 10+ year history of real estate investment success, large institutional lenders' support, and physical assets backing the investments. While no investment can ever be guaranteed, why not give Yield Crowd a shot?