Investing in real estate shouldn’t be exclusive to well-known real estate experts, as is often held.
Even after the COVID 19 outbreak, investing in real estate is still a very profitable business.
By now, it should be clear whether this is something you’re interested in or not. Let’s go through 1031 Crowdfunding as a whole together.
However, first and foremost, I should remind you…
1031 Crowdfunding is a real estate investing program.
Like most real estate investing training courses, you’ll likely be exposed to the “Big 3” investing types:
- Long-term buy-and-hold
Regardless of which path you go down, there is a lot of potential with real estate investing.
After all, it’s the world’s oldest wealth-builder.
However, before you leave this 1031 Crowdfunding review and go sign up, you might want to ask yourself:
“Is now the right time for me to get into real estate investing?”
Because, no matter which way you slice it, real estate investing is extremely capital intensive, labor intensive, or both.
So if you’ve only got an hour or two a day, or your savings account is a few zeroes lighter than you’re comfortable with, this might not be the best time for you to jump into real estate investing.
But that doesn’t mean you’re out of luck. It just means you need a system to free up more time and give yourself a stronger financial cushion.
A good way to get yourself there is with Digital Real Estate.
Digital Real Estate takes all the best parts of real estate investing, while eliminating most of the headaches:
- Low cashflow
- Interest payments
- High overhead
- Expensive repairs and maintenance
- Problematic tenants
And the best part?
Digital Real Estate allows you to build a passive income stream that’s actually passive!
An income stream that brings in consistent revenues every single month (from a couple thousand dollars to well over $10,000).
An income stream you could actually build in your spare time, and grow as large or as small as you want to, without having to spend hours a day analyzing deals, cold-calling homeowners, or dealing with contractors.
If that sounds like something you’d be interested in, check out Digital Real Estate.
This is the perfect first step to build recurring income that you can then use to start investing in real estate down the line.
However, if you’d still like to know more about 1031 Crowdfunding, keep reading.
What Is 1031 Crowdfunding?
1031 Crowdfunding is not like other crowdfunding platforms. It’s more of a service that allows investors to postpone paying taxes on real estate gains (via an IRS-approved 1031 exchange) while also taking advantage of some of the benefits of crowdfunding, such as online access to high-quality commercial real estate investments and shared ownership with other investors.
1031 Crowdfunding is a platform that enables investors to purchase and owning real estate commercial properties that have been pre-vetted by real estate professionals and pre-qualified to fulfill IRS 1031 exchange rules.
A 1031 exchange allows real estate investors to postpone paying taxes on the sale of an investment property by reinvesting the earnings in purchasing a new property. The basic idea is that if the investor receives no sales revenues, there is no income to tax.
Taxes can be postponed forever if no monetary benefit is received. As a result, a 1031 exchange is one of the finest tax advantages available to real estate investors. However, it is complicated by IRS laws, and if you do not do everything correctly while completing a 1031 exchange, you will not be eligible for the tax benefit.
This is where 1031 Crowdfunding comes into play. Investors on its platform have access to a ready supply of exchange-qualified real estate that can be purchased fast. This minimizes the possibility of:
Not being able to discover a suitable property to buy.
Failure to meet the timeframes required for investors to qualify for the 1031 exchange tax advantages.
Is 1031 A Good Investment?
Assume you sell a home for $250,000 with a cost basis of $150,000. You may pay about 53.8 percent in taxes on $100,000, or you can conduct a 1031 exchange and invest your $250,000 in a like-kind property, delaying the tax until you sell the new property.
You may invest the whole $250,000 instead of paying $53,800 in taxes and having less than $200,000 to invest. That is why a 1031 exchange is appealing.
The catch is that you must identify the home you want to acquire within 45 days of selling and close on the second property within 180 days of selling the first.
Getting the timing perfect with real estate investments can be difficult. If you don’t satisfy those deadlines, you have to pay the tax. In essence, your investment is susceptible to “closure risk,” a costly bet that disqualifies many well-intentioned investors who undertake 1031 swaps.
Your closing risk is eliminated with 1031 Crowdfunding since you, along with other investors, purchase an ownership percentage of an already qualifying property, and you may close on the swapped property in three to five days because it has already been pre-funded.
Completing a 1031 exchange is dependent on the investor’s ownership structure inside the investment rather than how the money is raised.
Investors obtain an ownership interest in the underlying real estate asset through a Delaware statutory trust (DST) without having to participate actively in the acquisition, management, or sale of the property.
Types Of Investment Opportunities At 1031 Crowdfunding
The site solely offers real estate investments, especially real estate that is exchanged rather than sold via 1031 exchanges. Sales are taxed, while exchanges are not. An exchange happens when a property owner or investor obtains replacement property quickly after selling their previous property.
When you sell your original property, capital gains taxes on gains exceeding $250,000 (single person) or $500,000 (married couple) on a primary home can exceed 30% when both state and federal taxes are considered, and the amount can be even higher if the property is not considered an owner’s primary residence.
If you prefer to swap the old property’s worth for the new property’s value rather than cash out, you will not be liable to capital gains tax on the transaction.
To qualify as like-kind, an exchange must meet the IRS criteria of being either (a) property held for investment or (b) property held for productive use in a business or trade. However, a one-to-one exchange or swap is not required for a transaction to qualify.
According to IRS regulations, you can sell three different properties, each worth one-third of the value of the property you then buy, and this counts as an exchange.
Selling one high-value property and buying two or three smaller ones works as well, as long as they’re of the same “like” kind. Only accredited investors are the ones who can participate in 1031 Crowdfunding.
What Do You Gain If You Invest In 1031 Crowdfunding?
When you invest through 1031 Crowdfunding, you purchase a beneficial interest in a DST. The DST owns equity in various real estate properties and manages the exchanges. This means you can own real estate without actively managing real estate.
The time required is one of the challenges ordinary investors confront while executing like-kind exchanges. After selling the original property, you have 45 days to find a replacement property and notify the seller or the seller’s agent (not just your attorney or agent).
After that, you have 180 days or until the end of the tax year to finalize the acquisition of the replacement property. 1031 Crowdfunding alleviates part of the stress associated with meeting these deadlines by sending out the necessary notifications and ensuring that purchases are completed on time.
The IRS permits this type of investment for both cash and 1031 exchange participants. Any investor that chooses to invest through a DST is referred to as a cash investor. Through their platform and the usage of a DST, 1031 Crowdfunding enables these investors to become 1031 exchange investors.
How Does 1031 Crowdfunding Generate Revenue?
The fees imposed by 1031 Crowdfunding are typically normal for Delaware Statutory Trusts, although somewhat more than those charged by other crowdfunding sites. Furthermore, the increased minimum investment of $25,000 raises the entrance obstacle.
- 3.5% acquisition fee
- 3.5% disposition fee
- 1% financing fee
- Property management fee is 4% of the gross rent
- Fee for refinancing is 1%
Cashflow And Potential Returns
Investing in a 1031 exchange often requires a longer time commitment than other crowdfunding investments, such as real estate or different types of assets.
Many contracts accessible via the 1031 Crowdfunding platform have a debt holding period of 7 to 10 years. Some, though, are as short as 5-7 years.
A closer look at the sample deals on 1031 Crowdfunding reveals an average expected cash flow of 5 to 7 percent.
Minimum Investment At 1031 Crowdfunding Investment
The minimum investment required to participate in offerings ranges from $25,000 to $100,000, depending on the investment. Non-1031 offerings require a $500 minimum commitment.
What Are The Fees Associated With 1031 Crowdfunding?
When investing in a third-party DST, sponsors are charged fees. Fees include an acquisition charge of 2% on average, an annual asset management fee of 25 to 100 basis points and a commission based on asset appreciation. 1031 Asset appreciation does not benefit crowd funders or third-party sponsors; rather, it is passed on to investors.
If you are contemplating a 1031 exchange, you can anticipate paying between 8% and 17% of the purchase price, depending on the agreement and your circumstances. You must total all costs and choose if it is more cost-effective to go through the trouble or pay the legal or tax advice.
You must, for example, continue to use an IRS-approved 1031 exchange trustee—and pay for the services of an intermediary. Because the qualified intermediary must be an unaffiliated third party whose sole purpose is to administer the 1031 property exchange, a crowdfunding site cannot act as your intermediary and sell the goods.
The fees charged by qualified intermediaries vary, but most sources estimate that a usual deferred 1031 exchange costs between $600 and $1,200.
Is 1031 Crowdfunding A Scam?
So, is 1031 Crowdfunding a scam? Not technically. You can make money with this program, but it’s definitely not as easy as 1031 Crowdfunding makes it sound.
There’s a ton of work to be done upfront, no real guarantee of success, and – most importantly – the actual profit margins on real estate investments are pretty small.
Now, there’s nothing wrong with front-loading the work and making the money later.
But if you’re grinding it out for 3 months – looking at deals, sending out offers, negotiating with the seller and lender to buy a rental property – and then your reward is like $100 a month in profits, it’s not really worth it.
What if, instead, you could do that same 3 months of work (in your spare time), and your reward was a $500 to $2,000 payment that came in every single month (with a 90-95% profit margin)?
And what if you actually didn’t need to wait 3 months? What if you could get started today and have your first payment in a week?
And what if you could double it next week?
Well, that’s the power of Digital Real Estate.
And, unlike traditional real estate, you can legitimately do this from anywhere. It’s a true lifestyle business.
Your laptop and an internet connection is all you need.
Some of the most successful students in this program run their entire 6-figure businesses from:
- A camper in the middle of the woods
- A beach chair on the water in Mexico
- A small villa in Greece
They’re able to travel around, living their lives first, and focusing on their income second.
Because even if they stop working for an extended period of time, the money keeps coming in.
So adventure, memories, and experience are the top priority.
And they never have to worry about how to pay for the next trip, or consider asking for time off.
If this sounds more like the type of life you want to lead, just click here to find out more about Digital Real Estate.
Are There Alternatives To 1031 Crowdfunding?
Yes, there are plenty of other business models to choose from if you want to pursue this making money online. Here are just a few:
What Is My Top Recommendation In Making Money Online In 2022?
Our review team has spent months researching, reviewing, and vetting dozens of business models and thousands of programs.
While there may be no “perfect business”, the research IS conclusive:
Digital Real Estate is the #1 online business model for those just starting out.
Whether you’ve never made a dollar online, or you’ve been in this space for a while but never really “made it,” Digital Real Estate is for you.
1) It’s Flexible: got an hour a day? You can do this. Ready to drop everything else and dive in full time? You can do this. Yes, the more time you put in, the faster you see results. But even with a little time each day, you can move the needle in a Digital Real Estate business.
And because this system is so flexible, you don’t have to constantly be working to make more money. It’s called PASSIVE INCOME because if you stop working, the money doesn’t.
Imagine taking 3 months off to just tour around Europe, rent a cabin in the woods to write a book, hike the Appalachian Trail, or live on the beach and surf all day.
This is only possible if you have an income stream that’s not tied to your time.
Flipping and wholesaling are full-time jobs (and more), no matter what any real estate guru tells you. You always have to be searching for deals, because if you stop, so does the money.
2) You Own & Control EVERYTHING: Yes, in traditional real estate you kind of “own” the properties. But there’s also a ton of debt tied to most real estate investments, which means the property isn’t truly yours.
A lender can take it away if you miss a payment. Not to mention, loan payments really impact your profit margins.
With Digital Real Estate, you own the assets outright (with a 90-95% profit margin), which means you have all the power and all the control.
3) Little To No Startup Costs: It’s possible to get into Digital Real Estate with zero dollars upfront. Because, using the strategies outlined in this program, you can get a client to pay you BEFORE spending a penny out of your own pocket…even before you do any work.
Even without getting paid in advance, you can have your first Digital Rental Property up, running, and generating profits for less than $100.
4) Minimal Ongoing Expenses: With traditional real estate, monthly expenses are HIGH. Between loan payments, ongoing maintenance, and repairs (not to mention the possibility of having to go through the eviction process), profit margins are slim.
Plus, whenever you have a vacancy, factor in the costs to turn over a unit (plus the fact there’s no money coming in until the next tenant moves in).
With Digital Real Estate, a 100% online business with minimal maintenance and ongoing costs, you never even have to think about that risk.
5) Easy To Duplicate: Ok, here’s the best part: once you have your first Digital Rental Property up and running, you can literally DOUBLE your income with a few clicks, a couple keystrokes, and a single phone call (and you don’t actually need the phone call).
Remember: each Digital Rental Property is worth $500 to $2,000 a month in semi-passive income (over 95% profit). Every time you decide to create another one and increase your income, it gets easier.
Because you have more knowledge, more experience, more results, and more momentum.
If you wanted to double your income with traditional real estate investing, you’d have to double your monthly rent, double your deals/number of units OR double your profit margins. And, guaranteed that’s a lot harder than a few clicks and a few minutes of your life.
6) Make Money Helping Real People: This part is what makes it all worth it. With Digital Real Estate, you’re actually helping people by solving your clients’ biggest problem:
Small, local businesses need more customers, and with Digital Real Estate, you are unleashing a flood of happy, paying customers for these businesses.
You make money by helping them make money.
Not a big, faceless corporation either…a small business owner who’s using that money to put food on the table for their family, start a college fund for their kids, or take care of a sick parent.
Once you see how Digital Real Estate makes a real impact in the lives of real people, you’ll sleep like a baby with a big smile on your face
Now, the choice is yours. You could continue browsing, looking at opportunities like 1031 Crowdfunding which could one day make you money.
You could continue researching, never making a decision.
OR, you could take a look inside, consider what you really want, and join a program that makes your dreams a reality. At the same time, joining a community of over 2,000 successful students that are living life on their own terms thanks to Digital Real Estate.
A consistent, reliable, semi-passive stream of income that doesn’t depend on you or your time to keep producing profits.
All while genuinely helping real people who are grateful and happy to pay for it.
If this sounds more like what you want out of life (or if you just want some nice side income), click here to learn more about Digital Real Estate.