According to the U.S. Department of Commerce, the average sale price of a home hit $446,000 in July 2021… up $17,300 from June and a huge 17.6% jump from a year earlier.
That’s great news for anyone who already owns a house.
But it’s especially good news for wealthy people who own multimillion-dollar mansions… often more than one of them.
Just consider…
According to U.K. website Money, it would take the average U.S. worker 6,581 years to buy Jay Z and Beyonce’s $88-million mansion in Bel Air.
And if you apply the recent real estate price gains to an $88-million estate, you’re talking about a one-year profit of $15,488,000.
See, for most ordinary Americans, owning real estate is a necessity more than an investment in a portfolio.
If you’re lucky, you buy one modest property to live in and that’s it.
There is no diversification. There is no ongoing income from tenants. And there is no huge payday.
The wealthy can get all of that and more – especially because they own the very best properties in the very best locations.
So how is someone of modest means supposed to invest in luxury properties in Malibu or South Beach?
Well, today I’ll tell you how…
And no, this isn’t about Real Estate Investment Trusts (REITs).
While they continue to be a great way to invest in large property portfolios, this is something completely different… and you won’t need to take out a mortgage or become a property baron.
A Real Estate Game-Changer
Here at PBRG, our goal is to help everyday investors live the lifestyle they deserve without breaking the bank or spending decades in the market scraping a little off the top…
And that includes opening the doors to investments ordinarily reserved for the rich.
Luxury real estate is clearly one of them.
From John Rockefeller to former football legend Roger Staubach… the rich have always made money from real estate.
In fact, Staubach’s real estate dealings made him $613 million – over 200 times more than he ever made as a Hall of Fame quarterback for the Dallas Cowboys.
Unfortunately, the three traditional ways of accessing private real estate markets cost big bucks…
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Direct purchase: If you’re a DIY investor, minimum deposits for a mortgage range from 10–20%. The median home price in the U.S. is around $200,000. And most people don’t have a spare $20,000 or $40,000 sitting around.
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Real estate investment groups: This method involves pooling your money with other like-minded investors to invest in rental real estate. Most local clubs require minimums of $5,000 and up.
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Private equity real estate funds: These funds are reserved for accredited investors and typically require a $100,000 minimum.
That’s where “fractional ownership” comes in… and it’s a game-changer.
The JOBS Act of 2012 originally paved the way for this opportunity because it allows small businesses to raise up to $50 million online from the public.
So they no longer have to rely on institutions or wealthy “accredited” investors for funding.
Previously, if they wanted to raise public funds, they went through a lengthy and expensive IPO (initial public offering) process.
But now, small businesses can raise funds from Main Street investors via fractional investments.
Here’s how it works…
The owner of an asset can list that asset on a platform and offer shares (fractions of the asset) to investors.
For example, you could list a $100,000 baseball card on the Rally platform and offer investors fractions of it at $100 apiece. Then, if the baseball card’s value rises to $1 million, a $100 fraction would increase to $1,000.
Platforms like Rally allow you to invest in collectibles while other platforms allow you to invest in private real estate, just like the wealthy. And you can access these markets from the comfort of your PC, laptop, or smartphone.
Think of fractional investing as a type of crowdfunding.
Crowdfunding is a way to raise funds online for a specific cause from hundreds, thousands, or even millions of people.
So, thanks to the JOBS Act, crowdfunding allows ordinary people to pool their money and invest in real estate projects – just as the heavy hitters have been doing for years.
How to Become a Real Estate Mogul
In some ways, crowdfunding real estate is similar to investing in a REIT.
Let’s say you buy 100 shares in a REIT. That means you own a piece of that company and the real estate it holds.
With crowdfunding, high-value assets are divvied up in much the same way.
The difference is these “shares” (and the perks of owning them) could be for anything – even a single property as opposed to a whole portfolio of buildings.
They can also come with less volatility and expense than stocks or other traditional investments.
For example, the minimum management fee for REITs is 3–4% of what you invest.
But many crowdfunding platforms don’t charge fees to their investors at all, only to borrowers.
It doesn’t take much to get started, either.
While private real estate equity funds charge a minimum of $250,000, on some crowdfunding platforms, you can buy fractions of properties for as low as $10. And you can open and fund an account online. You just need a smartphone, laptop, or PC.
One example is a platform called Groundfloor. It offers short-term, high-yield returns that are backed by residential real estate.
The company makes loans to cover the new construction, buying, renovating, renting, and refinancing of residential properties. (Although we recommend passing on refinanced loans due to their tendency to end up in delay or default.)
When you sign up, you can pick individual loans to invest in. And a year later, you’ll receive your principal back, plus interest (a fixed rate of return).
Thousands of Groundfloor investors have portfolios with dozens, and even hundreds, of real estate loans across 30 states. So, if you want to invest in real estate like the wealthy – but at a fraction of the cost – consider using the Groundfloor platform to get started.
And if you want to diversify even more, there are fractional investing opportunities in other trophy assets like art, classic cars, watches, and fine wine.
But the overall point is simple, and it’s one that Daily editor Teeka Tiwari drives home all the time…
For every reason, it pays to have some part of your wealth in alternative assets right now. They can help you stay ahead of the massive money-printing happening around the world. They can move independently of other asset classes like stocks and bonds. They can provide levels of privacy and portability far beyond most traditional vehicles. And even a relatively small amount of money can end up producing outsized gains.
If you’re looking for new ways to grow and protect your nest egg, completely outside of the ups and downs of the stock market, you will love fractional investments.
Best wishes,
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Nilus Mattive
Analyst, Palm Beach Daily
P.S. Besides the outsized returns fractional investments can give you, “Tech Royalties” are another way grow your nest egg exponentially.
Tech Royalties allow you to earn extra income – in the form of “free” crypto – without paying more than your original investment.
And with crypto mass adoption quickly taking off, investing in Tech Royalties could be the difference between simply supplementing your income… or moving the needle on your net worth.
To learn more about how Tech Royalties can grow your portfolio… click here.