In this article we explain how to invest in real estate with Stake, its advantages and our personal experience. Check also at the end  for a link to start investing with bonus 200 AED  (~55 USD)

 

First, a few words about crowd real estate investing

Crowd real estate investing, also known as crowdfunding real estate, is a relatively new and innovative way for individuals to invest in real estate properties collectively. It leverages technology and the power of the internet to bring together a “crowd” of investors, each contributing a relatively small amount of money to collectively fund a real estate project. This approach democratizes real estate investing, making it accessible to a broader range of individuals who may not have the capital required to purchase an entire property on their own. Below you will find the key aspects of crowd real estate investing:

• • Online Platforms: Crowd real estate investing is facilitated through online platforms or websites that act as intermediaries between investors and real estate developers or property owners. These platforms list various real estate investment opportunities, including residential, commercial, and industrial properties.

• • Diverse Investment Options: Investors can choose from a variety of real estate projects based on their preferences and risk tolerance. These may include residential properties, office buildings, retail centers, apartment complexes, and more. Each project typically has its own funding target and investment terms.

• • Lower Minimum Investment: One of the primary advantages of crowd real estate investing is the lower minimum investment requirement. Rather than needing to buy an entire property, investors can contribute as little as a few hundred dollars to participate in a project. This allows for greater diversification of investments.

• • Risk Sharing and risk assessment: Crowd real estate investing spreads the risk among a larger group of investors. If a project succeeds, the profits are distributed among the investors in proportion to their contributions. On the contrary, if a project faces difficulties or fails, the loss is shared among the investors as well.

• • Transparency and Information: Crowdfunding platforms typically provide detailed information about each investment opportunity, including property details, financial projections, potential risks, and the developer’s track record. This transparency helps investors make informed decisions.

• • Passive Income: Depending on the type of project, investors may receive periodic distributions of rental income or profits generated from the property. This can provide a source of passive income similar to traditional real estate investments.

• • Liquidity: While real estate investments are generally considered illiquid, some crowdfunding platforms offer secondary markets where investors can sell their ownership stakes to other investors. This provides a degree of liquidity that traditional real estate investments often lack.

• • Regulation: Crowd real estate investing is subject to securities regulations in many countries. These regulations are in place to protect investors and ensure that crowdfunding platforms operate transparently and within legal boundaries.

It’s important to note that like any investment, crowd real estate investing carries risks, including the potential for loss of capital, project delays, or unexpected expenses. Additionally, not all crowdfunding platforms and projects are created equal, so thorough due diligence is crucial before committing to any investment.

Investors interested in crowd real estate investing should carefully assess their financial goals, risk tolerance, and the specific investment opportunities available on crowdfunding platforms to determine if it aligns with their investment strategy.

What is Stake?

Stake is a crowd real estate investing app that allows you to invest in properties for as low as 500 AED (~136 USD). So, you do not need to get a mortgage or risk a big amount of your available money to start investing in real estate. Additionally, you can diversify by investing small amounts in multiple properties and therefore minimize your risk. The company currently gives exposure to investors for the UAE real estate market (that is rapidly growing) and they are already expanding to Saudi Arabia. However,  anyone can invest from countries all over the world.

 

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The model works in the following way. After the user signs up and completes the KYC process (Know Your Client) which is fast and simple, he can transfer money to his stake wallet through debit cards or bank transfer. The first method is instant and Stake covers the charges. The latter may take 3-7 days. Once the wallet is funded, the user may start investing.  The app allows you to invest in different properties during the year. Each property that is still in the funding stage needs to get the required amount from the investors before a deadline (usually 1 month). If the property gets funded (which is happening in most of the cases in my experience), the rent to investors starts distributing typically around two months after funding is complete.

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Exit

The investors get 2 exit windows during the year. At each exit window they may choose to sell their stake to other investors inside the platform or, at the end of each year since funding, meanwhile they are given the option to sell the property by voting. If for example after one year of a property’s funding, investors are owning more than 50% of the property vote for the property to be sold, then the money is distributed among the original investors of the property.

App experience

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Properties

Here is my experience and insights using Stake for the past three months. The app has a good user experience and it is intuitive. It allows you to invest in the United Arab Emirates real estate market which is stable and growing at a fast pace. There are usually around four properties available during any period and you can find them in the “Available” tab.

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For each property you can get a glimpse of its financial characteristics:

• • The Annualized return which is the projected total return you can get on your investment for one year after the subtraction of Stake’s and administration fees.

• • The Annual appreciation which is the projected annual appreciation of the property. (Stake choose it at 6% based on the performance of their previously/current funded properties at the time this article was written)

• • The Projected gross yield is the gross rental income of the property

• • The Projected net yield which is the income received from the rent after the subtraction of administration and property related fees.

You can further dive into each property and see photos or take a virtual tour. Moreover, on the property’s view the investor can see the total cost of the property, the transaction costs, Stake’s fee as well as the property’s rental income. The user can also download the property’s files such as projections, initial valuation report and investor memo. Stake did a pretty good job on that, being fully transparent with its investors.

 

Wallet

The investor can access his wallet in the app to deposit or withdraw money as well as see a list of all his past transactions and rental income.

 

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Portfolio

In this tab the investor can see all the properties he had invested in alongside their status (funding, rented, SPV in progress) and the income received from each one. The way that Stake legally distributes the property to owners is by creating an LLC company and distributing an analogous percentage of its shares to the investors. The investor can download both the Title Deed and Share Certificate and by clicking on View property SPV online he can see the details of the actual company that was created and his name in the shareholders list. That way he can validate that indeed he legally completely owns a percentage of the company that owns the property that he had invested in.

 

Managing Risk

So what happens in case of a catastrophic event (i.e company bankruptcy)? Nothing happens to the investments if Stake goes bankrupt, this is one of the reasons the SPV’s are created. They are owned directly by the investors. Before Stake exits, they need to hire an administrator who is as competent as them to continue the operations and liquidate the assets upon voting between the investors. You can read more information about that on section 18 CONTINGENCY PLANNING of their terms and conditions.

 

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Rewards

Finally, Stake provides three tiers to reward their investors.

• • Intro – You get it by creating an account. It offers you 200 AED (~55 USD) for every qualified referral to the platform.

• • Plus – You reach it after investing 25,000 AED in property stakes and it offers 1% cashback on every investment plus 500 AED for every qualified referral

• • Elite – You reach it by investing 100,000 AED in stakes and it provides 2% cashback and 750 AED on qualified referrals.

Start investing with Stake using this referral link and get 200 AED bonus to invest in properties and support our content!

Disclaimer: The content and materials featured or linked to, are for your information. This is not investment advice.

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