1031 Crowdfunding Review – Benzinga

With over 1,800 exchange transactions completed, 1031 Crowdfunding has been voted the #1 Real Estate Crowdfunding Platform for 1031 Exchanges by numerous publications. 

1031 Crowdfunding Overview

1031 Crowdfunding offers various real estate investment opportunities, primarily focusing on Delaware Statutory Trusts (DSTs) and other 1031 exchange-eligible properties. The platform also offers other alternative real estate investments such as Real Estate Investment Trusts (REITs), Bridge Financing Funds, and Qualified Opportunity Zone Funds.  The platform features proprietary models and calculators to help investors create custom portfolios that align with their specific investment strategies. While fees are baked into the deals and are on par with industry standards, the breadth and quality of offerings, combined with expert guidance, make 1031 Crowdfunding a strong contender in the real estate investment space.

Delaware Statutory Trusts (DSTs)

A Delaware Statutory Trust (DST) is a legal structure that allows multiple investors to own fractional shares in a single property or a portfolio of properties. DSTs are often used in 1031 exchanges, allowing investors to defer capital gains taxes by reinvesting proceeds from the sale of an investment property into a trust that holds title to 100% interest in real property.

Although 1031 Crowdfunding provides many third-party offerings on their online platform, the company also brokers their own deals. 1031 Crowdfunding’s subsidiary, 1031 CF Properties, is a leading sponsor in assisted living and memory care alternative investments. Their sponsorship and management of 14 real estate programs, including 17 properties, across nine states further solidifies their position as a trusted partner in the industry. 

Their management team of real estate experts, with over 135 years of combined experience, is dedicated to offering vetted DST offerings on the platform. Their team is composed of real estate experts, offering investors the necessary real estate documents to perform their proper due diligence prior to making an investment. Each offering is carefully evaluated with the Company’s philosophy of protecting investors’ principal, providing stable income with the potential for upside appreciation.

Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) are companies that own, operate, or finance income-producing real estate, allowing investors to gain exposure to real estate assets without the hassles associated with direct property ownership.

1031 Crowdfunding’s platform offers a selection of private and non-traded REITs, giving investors access to diversified portfolios of real estate properties. REITs can be an attractive option for investors seeking regular income, as they are required to distribute at least 90% of taxable income to shareholders. However, while some REITs can provide liquidity and diversification, the investment vehicle also comes with risks, such as sensitivity to market fluctuations and potential impacts from rising interest rates. 

1031 Crowdfunding’s platform values transparency, offering an extensive data room for each offering, where investors can access documentation and perform their own due diligence before making any financial decisions.

Bridge Financing Funds 

Bridge financing funds typically provide short-term loans to help capitalize real estate properties, usually during transitional periods, such as before long-term financing or a sale is secured. While utilizing bridge loans can be a suitable tool for borrowers to finance an investment during an interim period, making bridge loans may also benefit investors. Being a lender on a bridge loan may be a good way to diversify your portfolio and increase profitability. 

1031 Crowdfunding offers bridge financing funds on their platform that allow accredited investors to invest in limited partnerships making bridge loans specifically for properties that will eventually be used for Delaware Statutory Trusts (DSTs), value-add or opportunistic offerings. 

There are many different types of bridge loans available, therefore,  it’s important to conduct thorough research and evaluate your financial goals prior to making any financial decisions. 

Qualified Opportunity Zone Funds

A Qualified Opportunity Fund is an investment vehicle that channels capital into economically distressed areas known as Opportunity Zones. Taxpayers can invest in these zones through Qualified Opportunity Funds (QOFs), providing a pathway to defer federal income tax on capital gains and potentially reduce their overall tax liability based on eligible gains.

A taxpayer may defer recognizing capital gains from a sale of a capital asset if the capital gains are invested in a QOF within 180 days of the disposition of the asset. By investing in a QOF, a taxpayer is able to defer recognition of their capital gains until either the QOF is sold, or December 31, 2026, whichever occurs first. A taxpayer may invest an amount greater than the eligible gain, but only the capital gain portion will be eligible for the tax benefits under the program.

Additionally, investors that hold their QOF investment for at least 10 years may be able to exclude any additional gains from taxes. While taxes on the original capital gains must typically be paid by the end of 2026, any future capital gains realized within the QOF investment may benefit from a step-up in basis. This means potential permanent exclusion of appreciation on those gains, subject to program rules. 

Senior Housing 

1031 Crowdfunding’s platform offers a wide range of offering types, catering to various investor needs. The online marketplace provides investment opportunities across various asset classes, including multifamily, self-storage, industrial, NNN lease properties, and more. 

The company’s subsidiary, 1031 CF Properties, specializes in sponsoring one particular asset class – senior housing. In recent years, assisted living facilities have gained popularity among institutional investors because Baby Boomers – the second largest generation in the United States – are aging. As a result, many will move into assisted living facilities to access a higher level of care that would otherwise be unavailable at home. The Company believes that impressive demographic fundamentals will drive the demand for these facilities in the coming years.

1031 Crowdfunding is renowned for its top-notch investor relations, offering white-glove service to all clients. With multiple contact options, including social media channels and a dedicated investor relations team, the platform has a 4.9-star rating on Google Reviews and an A+ rating from the Better Business Bureau (BBB).

You can also connect with 1031 Crowdfunding on Youtube, X, LinkedIn, Facebook, Instagram and via their Investor Relations team. Other support options include phone and direct mail and email. 

The platform implements strong security measures, including encryption and secure access protocols, to safeguard investor information. Given the sensitive nature of the data involved in real estate transactions, 1031 Crowdfunding maintains a high-security standard, ensuring investor confidence.

1031 Crowdfunding has a relatively low barrier to entry, with a minimum investment of $25,000 for most investment vehicles and as low as $5,000 for REITs. While the fees are deal-dependent and aligned with industry standards, they are disclosed upfront in the offering documentation.

Some offerings, such as certain REITs, are accessible to non-accredited investors, whereas DSTs are exclusively available to accredited investors.

1031 Crowdfunding offers a platform that strikes an excellent balance between simplicity and functionality, making it accessible for both seasoned investors and those new to 1031 exchanges. The user interface is intuitive, with a clean layout that guides users through the investment process without overwhelming them with unnecessary complexity.

One of the standout features is the platform’s proprietary tools and calculators, designed to help users build customized investment strategies that align with their financial goals. These tools allow investors to easily compare different offerings, assess potential returns, and structure their portfolios based on individual preferences and risk tolerance. The platform also provides educational resources and step-by-step guides, further enhancing the user experience by empowering investors with the knowledge to make informed decisions.

The thoughtful design and features of 1031 Crowdfunding make it a top choice for investors looking for a seamless and efficient way to navigate the complexities of 1031 exchanges and real estate investments.

1031 Crowdfunding vs Competitors

1031 Crowdfunding competes with platforms like RealtyMogul and Fundrise, which also offer real estate investment opportunities with some overlap in DSTs and REITs. 1031 Crowdfunding distinguishes itself with a specialized focus on 1031 exchanges and a deeper inventory of DSTs, particularly in the senior housing sector. This specialization, combined with superior customer service and expert management, sets it apart in the crowded real estate crowdfunding space.

1031 Crowdfunding is highly rated for its comprehensive offering, industry expertise, and exceptional customer service. While the fees are standard for the industry, they may still be a consideration for some investors. The platform’s strong focus on 1031 exchanges and senior housing DSTs makes it a top choice for investors in these areas.

Frequently Asked Questions