Real Estate as a Service (REaaS)
The “as-a-service” concept has been popularized in the world of software, with software-as-a-service (or SaaS) businesses transforming how we use technology to get results. These companies offer intuitive, customer-facing applications that live in the cloud and operate on subscription-based models. They’re so popular, in fact, they’re increasingly adopted by enterprises.
That’s because these solutions are powerful, easy-to-use and data-driven.
Thanks to the power of crowdfunding technology, the concept now applies to real estate. Introducing RealtyMogul.com’s real-estate-as-a-serviceTM (REaaS), a new way for the real estate industry to invest and borrow. The same way SaaS combines power and usability in one easy to use package, real-estate-as-a-serviceTM makes it easy to access and manage preferred property investment deals online using crowdfunding.
Why Real Estate?
Real estate is an alternative investment that can further diversify portfolios. As an asset class, real estate investing can offer investors potential benefits like:
- Cash Flow Real estate potentially offers income that may beat yields on dividend stocks and bonds. Real estate’s yields are often backed by cash flow from rents, which may hedge against the volatility of markets. Additionally, commercial real estate generally doesn’t move in sync with stocks and bonds.
- Tax Benefits Real estate transactions may offer significant tax benefits, depending on their structure. These benefits can include deductions related to depreciation or interest expense, and the tax benefits associated with a 1031 exchange. It is always prudent to consult a tax expert to assess your individual situation.
- Hedge Against Inflation. Commercial real estate is a potential hedge against inflation. According to a report from TIAA-CREF, “If inflation emerges, investors in commercial real estate will likely withstand it according to the historical performance of the asset class. Over five-year holding periods historically, commercial real estate returns outpaced inflation nicely. Over short term periods, commercial real estate returns have been modestly correlated with inflation demonstrating their ‘inflation hedging’ capacity.”
Like any investment, real estate has risks. No real estate investment guarantees any return or the preservation of your principal.
Previously, real estate investments were only accessible to a select few. Then came along crowdfunding and certain legislative changes that make real-estate-as-a-serviceTM possible.
Crowdfunding and Real-Estate-as-a-ServiceTM
Real-estate-as-a-serviceTM relies on the power of crowdfunding, or using online platforms to pool capital and fund projects, companies or investments.
Crowdfunding is a booming industry worldwide. Why? Global crowdfunding efforts more than doubled in 2014; they more than doubled again in 2015—a rise from $6 billion to $34.4 billion. Millennials are 10 times more likely to use these platforms than previous generations. And they offer the user experience, product mix and service that this demographic has come to expect from online giants like Apple and Amazon.
At RealtyMogul.com, we’re now bringing the power of crowdfunding to real estate investment, allowing investors pool their money to buy equity in properties or property debt (mortgages) on buildings.
But real-estate-as-a-serviceTM is more than simply crowdfunding, though crowdfunding technology and legislation like the JOBS Act make it possible.
What is Real-Estate-as-a-ServiceTM?
Real-estate-as-a-serviceTM is a full solution for real estate investment in the 21st Century. Before crowdfunded real estate, these preferred deals were only available to those without deep pockets and access to deal flow. Now, real-estate-as-a-serviceTM presents a fully online way for any accredited investor to quickly, easily and continually invest in real estate deals anywhere in the U.S. for as little as $5,000.
Real-estate-as-a-serviceTM helps investors and borrowers potentially both win faster and easier than traditional methods (just like the best SaaS solutions) Investors may have better access to deals—and some can get exposure to this alternative asset class for the first time. Borrowers can close equity, debt, mezzanine or preferred equity financing faster and on shorter notice than if they used banks or traditional lending outlets.
This doesn’t just make deals potentially easier. Real-estate-as-a-serviceTM also brings simple, powerful data-driven dashboards to bear on your investment management. You’ll see all your investments in one place, track performance and manage new deals.
Software-as-a-service solutions helped businesses thrive by putting the power of software into the hands of more people worldwide. Here at RealtyMogul.com, we’re betting real-estate-as-a-serviceTM has the same effect, connecting more investors with more deals and more borrowers with ready capital.