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If you want to invest in real estate but don't have the cash, a new crowd investing service might be for you. Our Patch of Land review covers the details, including the claim of a 12% annual return.

patch of land reviewMany of us dream of being a real estate mogul, enjoying the success and financial freedom that often accompanies the position. However, most people simply don’t have the money or connections to begin investing in Manhattan skyscrapers.

However, that doesn’t mean all hope is lost. You still have opportunities to make smart property investments that could pay off in big ways. This country is actually filled with properties that simply require smart investors and some rehab work to become valuable, profit-creating ventures. And Patch of Land wants to help you do just invest in them.

Patch of Land is opening up a world of new possibilities for ambitious folks just like you. They help aspiring real estate investors get property purchases and rehab projects done without the assistance of banks and traditional lending institutions. So, is this a company that could help you enter the property world with a relatively small commitment?

Let’s discover the lay of the land, if you will, in this Patch of Land review.

A Quick Overview

Patch of Land is a good fit for someone looking to create passive income from smaller investments, rather than investing in and managing properties on their own. The company boasts the ability to earn up to 12 percent of your investment back in one year.

The average loan size for projects is $521,287. Patch of Land uses the growing trend of crowd-sourcing in its investment model. This allows people to come together to back property investments and own a piece of the pie. Investors are able to invest directly in brick-and-mortar real estate without going through a ton of red tape.

Learn More About REITs: Real Estate Investment Trusts

The main perk this company offers is a high-tech platform where investors and borrowers can connect from around the country.

What to Expect When You Invest

Investors who participate with Patch of Land have access to detailed, transparent information regarding borrowers and projects. This can be used to determine whether or not the option being presented is a good investment.

Investors have total freedom when it comes to searching for investments based on geographical location, project type, loan type, and more. In addition, they are able to view real estate project proposals and key documents regarding interest rates and other details.

There is plenty of room to do your own due diligence, based on the information that is provided for each investment. Most projects listed on Patch of Land feature 12-month residential loans or 18-month commercial loans.

Related: Real Estate Versus Stocks: Where Should Your Nest Egg Go?

Who Can Participate?

While Patch of Land is certainly opening up the world of real estate investing to a wider population, it isn’t something that everyone will be able to participate in.

You actually must qualify as an accredited investor to participate. This means that you will need to earn at least $200,000 annually for two years in a row. In addition, your net worth must be at least $1 million, excluding the value of your primary residence.

Patch of Land requires a minimum investment amount of $5,000.

The Big Pros

Patch of Land’s platform is really innovative. You can complete all of your transactions and view documents via the company’s mobile platform. This is ideal if you’re simply investing in your spare time, while also tending to other businesses.

The platform uses bank-level encryption from Symantec, which should give you added peace of mind. This provides a secure setting for your personal information and transaction histories.

Patch of Land implements traditional underwriting procedures for things like third-party appraisals, property valuations, and borrower risk profiles.

One thing that makes Patch of Land stand apart from other similar investment platforms is that the company actually brings its own funding to the closing table and pre-funds each deal. This means that the money you’ve invested will begin earning interest right away. This also means that you can count on closings to happen on time.

An Alternative: Is Realty Mogul the Easiest Way to Invest in Commercial Real Estate?

Patch of Land is also one of the only platforms to actually allow investors from outside of the United States to join. They simply need to have a United States bank account and accreditation from their country of origin.

A Few Cons to Consider

The world of crowd-sourced real estate investing is still relatively new. This means that investors don’t have a lot of examples to look to when it comes to what happens if a platform folds or encounters legal issues. This could give you a reason to be cautious about investing too deeply using a product like Patch of Land.

Because they’re fairly new and only gained traction after the 2008 crash, it’s also hard to predict what these sorts of investments would do to a portfolio when the market has another downturn.

Something else that may give some investors a reason to pause is that gains earned using a real-estate crowdfunding website are taxed as ordinary income. This could be a negative factor depending on your tax bracket.

Lastly, there is also the possibility that you could encounter a loan default once you’ve invested.

Is Patch of Land a Good Investment Platform?

There’s no question that Patch of Land is the real deal when it comes to crowdfunded property investing. The company is hard to top when it comes to getting deals approved and funded quickly and efficiently.

It is definitely worth considering signing up with Patch of Land if you’re interested in putting your money toward short-term debt with generous yields. Make sure to keep the downsides of this type of investing in the back of your mind and ensure that you have the required assets to invest.

Patch of Land could be your first step toward becoming a successful real estate investor.

Have you invested with Patch of Land, or other crowd-sourced real estate funding companies? What has been your experience? What are your concerns?

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