Low Fee Diet: How to Boost Your Real Estate Returns

As you’re doing your research about online real estate investing, don’t let enticing return projections distract you from reading the fine print regarding fees – that’s where the true story lies. Fees reduce investment portfolio returns so substantially that the SEC issued a warning to protect investors.

Below we’ll help you weed through the fine print of the online real estate platforms so you can quickly discern the low fee providers from the high fee providers. Armed with this information, you’ll be able boost your real estate returns!

Types of Fees

Generally speaking, there are a variety of fees in any passive real estate investment vehicle, including online real estate investment platforms: 1) one-time offering fees, 2) ongoing asset management fees, and 3) transaction fees. Let’s delve in.

#1) One-Time Offering Fees

This is the initial fee charged by a sponsor for setting up the investment vehicle, and is intended to cover legal, marketing, and organization formation costs. That’s reasonable.

But some sponsors often say they target a certain percentage, say 5% of your initial investment, but that percentage only applies if they reach their fundraising goal; otherwise the percentage grows if funding comes in short.

Say that platform marketing a 5% “target” setup fee only raises a third of its goal – your actual setup fee could triple! Streitwise’s Manager has opted to waive the 3% of gross proceeds reimbursable for organizational and offering costs incurred which means no one-time offering fee. The Manager reserves the right to reinstate the reimbursement should gross proceeds exceed an allowable threshold for reimbursement in the future.

#2) Ongoing Asset Management Fees
This is the ongoing fee charged to help cover the sponsor’s costs associated with employing the personnel and maintaining the infrastructure to acquire and oversee the investments. Also reasonable.

However, instead of hiring a seasoned team of real estate professionals and operating the properties themselves, many online platforms are merely online intermediaries that collect funds, charge an asset management fee for “managing” your money, and then invest it with a third-party real estate operator. And guess what – that someone else is likely charging fees as well to do the work you think you’re paying the platform sponsor to do.

Streitwise charges a flat 2% ongoing asset management fee (which is accounted for before the dividend is distributed). Every dividend we reference is net of fees.

#3) Transaction Fees
This is where the really offensive fees start to set in. Transaction fees are charged by sponsors for events or actions over the life-cycle of a real estate investment.

The sponsor buys a property? Acquisition fee.
Puts a loan on the property? Financing fee.
Signs a lease with a tenant? Leasing fee.
Completes a renovation? Construction management fee.
And when all is said and done and the sponsor sells the property: Disposition fee.

These are just a sampling of the transaction fees sponsors buried in the fine print. But wait a second, what was the asset management fee for? Isn’t the asset management fee supposed to cover all these? Streitwise doesn’t charge any transaction fees.

The Takeaway

There are online platforms with no real estate expertise charging potentially excessive and hidden fees, and there are others such as Streitwise that employ seasoned vets in a platform grounded in a low and transparent fee structure. You don’t have to take our word for it – the Real-Estate Crowdfunding Review rated Streitwise as having the best fees in the industry.

So instead of doing a lot of unnecessary exercise to boost your real estate returns, why not try a low fee diet!

Alex Wills

Mr. Wills is the Marketing Director and Head of Product for Streitwise.

Prior to joining Streitwise, Mr. Wills was Head of Paid Media at Bitcoin IRA and Fortress Gold Group. Previously, Mr. Wills was the Director of Lead Generation at GTMA, a real estate marketing agency, where he founded the paid media department that oversaw a large nationwide portfolio of multifamily properties. Mr. Wills holds a Bachelor of Science degree in Marketing from the University of Florida.

SW Manager, LLC (“Manager”) is a wholly-owned subsidiary of and controlled by Tryperion Holdings, LLC (our “Sponsor”). Manager is the external manager and advisor of 1st Streit Office Inc. (“1st Streit Office”) and 1st Streit Office Operating Partnership LP (our “Operating Partnership” and, together with 1st Streit Office, “Our Current Offering”). 1st Streit Office is the sole general partner of our Operating Partnership, through which all of our assets will be owned and substantially all of our operations will be conducted. All references herein to “Streitwise” refer, as applicable, to Manager, 1st Streit Office, the Operating Partnership, or any of their affiliates (collectively, the “Streitwise Entities”). Unless explicitly stated to the contrary, all references to “we,” “us,” and/or “our” shall refer to the Streitwise Entities. By using Streitwise, you accept our Terms of Service and Privacy Policy.

An offering statement regarding this offering has been filed with the SEC. This offering is structured as a non-traded real estate investment trust, or “REIT,” under Regulation A+ of the JOBS Act. The SEC has qualified that offering statement which only means that Streitwise may make sales of the securities described by that offering statement. It does not mean that the SEC has approved, passed upon the merits or passed upon the accuracy or completeness of the information in the offering statement. You should read the Offering Circular before making any investment which is available here: streitwise.com/oc

You may have been referred to Streitwise by a third-party (“Solicitor”). Compensation to any Solicitor may be up to $200 per email registration. A Solicitor may promote and/or may advertise Streitwise’s investment services and may offer independent analysis and reviews of Streitwise’s services. Streitwise and any Solicitor are not under common ownership or otherwise related entities. We cannot ensure the accuracy of the data provided from any Solicitor.

Performance: Past performance is not a guarantee of future results. All historical returns, target returns, or hypothetical projections may not reflect actual future performance.
Risk: This investment involves a certain level of risk and may result in partial or total loss. We cannot guarantee that we will reach our target return for our investors.
Tax: Prospective investors should confer with their tax advisors regarding the tax consequences based on their particular circumstances. Neither Streitwise nor any Solicitor assumes responsibility for the tax consequences for any investor.
Liquidity: Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term should not invest. See Stockholder Redemption Plan in the OC.

¹ Dividends & returns: Current annualized dividend based on the most recent dividend declaration as of the quarter ending 3/31/2024. Dividend return calculations based on NAV at the time of dividend return. 1Q24 dividend payout of $0.11/share equates to a 6.2% dividend based on the current NAV. The REIT has averaged a 7.2% annualized return since 2020 and a 8.3% annualized return since 2017 based on the average NAV for the respective periods. See Quarterly Report for all returns history.
² Source: FTSE NAREIT All Equity REITs vs S&P 500.
³Sponsor Performance: Related to investments by Sponsor, Tryperion Holdings, as part of one of its prior programs, and not of any of the Streitwise Entities. Reflects gross IRR on realized investments in the Sponsor’s investment portfolio since inception. Sponsor performance data as of 4Q23.
⁴Target returns: We will seek to invest in real properties and other real estate-related assets that we believe can produce a strong return through a combination of cash flow and appreciation. We cannot guarantee that we will reach this target return for our investors.

This page may contain forward-looking statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates”. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in the Offering Circular. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the Company’s filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

© 2024 Streitwise. All Rights Reserved. Apple, the Apple logo and iPhone are registered trademarks of Apple Inc. Streitwise is not affiliated with nor related to NAREIT or its annual REITwise conference.

Low Fee Diet: How to Boost Your Real Estate Returns

Types of Fees

<img fetchpriority="high" decoding="async" class="alignright wp-image-2496" src="https://streitwise.com/wp-content/uploads/2018/07/low-fees-high-returns-graph-1.png" alt="" width="750" height="571" data-eio="l" />The Takeaway

The Takeaway