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EQUITYMULTIPLE Review | Best Real Estate Platform For Accredited Investors? - YouTube
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so in this video today we are going to
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be doing a review of the equity multiple
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crowdfunded real estate investing
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platform so over the last year and a
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half or so I've been reviewing a lot of
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these different platforms and studying
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them and writing about them over on my
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blog known as investing simple and we
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have a pretty comprehensive article over
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there on the top nine best crowdfunded
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real estate platforms available right
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now in 2020 and equity multiple is one
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that has made our list if you want to
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check out that full list that's gonna be
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down in the description below now equity
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multiple is essentially a crowdfunded
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real estate platform that gives
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accredited investors access to
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institutional quality commercial real
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estate deals so that is the very first
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thing that we have to make clear here
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about this platform is that this is a
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platform for accredited investors only
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if you guys are not familiar with what
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that means I will put up the
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requirements on the screen right now so
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you have to meet these qualifications in
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order to be an accredited investor so
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many of these real estate platforms
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offer you the option to invest in what
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is called a private placement which is
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an individual real estate property
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rather than a portfolio of different
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properties and the SEC has determined
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that these investments are higher risk
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and higher potential return but as a
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result the average retail investor
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should not be investing in them so
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because this is a higher risk and higher
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potential return investment the SEC has
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restricted it to accredited investors
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only now there is a link in the
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description below if you guys do decide
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to sign up for equity multiple it is an
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affiliate link so if you do use it I may
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earn a small commission in the process
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totally optional on your end but it is a
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way to give back to me for putting this
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video together for you so a lot of these
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different crowdfunded real estate
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platforms out there
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are pretty new because this has only
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been a legal form of raising capital
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since 2012 so you're looking at a lot of
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these platforms out there like fund rise
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or realty mogul or rich uncles and you
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may notice that they don't have a long
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track record or opera
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history well that is one of the benefits
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here of investing with equity multiple
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and that is the fact that they are
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actually backed by a leading national
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real estate firm known as mission
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capital which has been around since 2002
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so while a lot of these platforms don't
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have a lot of track record and operating
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history in this business equity multiple
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is backed by a company that does have
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track record and does have some skin in
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the game here and a good amount of
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operating history so if you're looking
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at the equity multiple platform you will
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see an array of different properties
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that you can invest in but just how do
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those properties end up on that website
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let's go ahead and answer that now so
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this is how the process works for
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properties that are listed on equity
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multiple first of all trusted partners
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are going to source investment
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opportunities and essentially put these
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in front of the equity multiple team the
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next step is that the equity multiple
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team is going to vet the properties as
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well as the local real estate market
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where that property is located after
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that they are going to stress test the
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properties under a variety of conditions
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and what they say on their website is
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that less than 5% of the properties they
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look at are actually accepted and then
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available on their platform and then the
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5% of properties that are accepted are
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then listed on the platform and
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available to investors now as far as the
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different real estate deals offered on
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equity multiple they say they have three
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different types available to investors
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and each have a different risk and
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reward profile the first type is equity
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which has a higher upside but also has a
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higher risk
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so unlike debt investors you have an
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uncapped potential upside so if this
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property doubled in value your
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investment could double in value as well
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or as a debt investor doesn't have any
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potential upside with that investment
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because they simply earn the interest
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from that loan whether it be a fixed
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rate or a variable rate however the
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downside to this is that the equity
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investors are going to be the last to
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get paid in any kind of liquidation
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situation so that is the advantage that
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debt investors have is that they are
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first to get paid if they have that
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first lien position on the mortgage so
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because of that
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higher potential return it also has the
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highest risk as well which does suit
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some investors but maybe somebody who's
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a little bit older may not be looking
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for that type of risk in their portfolio
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the second type of deal on the platform
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is called preferred equity and these
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investors are paid before equity
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investors and project sponsors giving
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you more downside protection so if there
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was some kind of liquidation situation
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that occurred preferred equity is going
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to be paid before deal sponsors or
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regular equity investors giving you some
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level of protection there as far as what
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would happen in a worst-case scenario
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now as a preferred equity investor you
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do get fixed monthly or quarterly
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returns as well as a fixed portion of
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the project upside so you won't get all
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the upside that you would as a regular
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equity investor you will get some of
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that upside but you will also have some
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downside protection because you are
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further ahead in line than the deal
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sponsors and regular equity investors in
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terms of who is getting paid first and
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then the final type of deal on the
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platform is called syndicated debt which
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has the most downside protection and
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because it is the safest investment it
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is going to be a lower potential return
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so each loan that you invest is going to
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be a first lien loan which means you are
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first in line to get paid in a
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liquidation type situation if that were
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to arise however since this is a debt
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investment and you are not an equity
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owner in the property you do not have
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any of the potential upside in terms of
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asset appreciation so if the building
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doubled in value it doesn't matter as a
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debt investor because you are just
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getting that fixed or variable interest
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as the banker for that project so now
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let's cover a few other things that you
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should know about the equity multiple
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investing platform first of all the
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minimum investment to get started is
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going to be $5,000 the next thing you
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may want to know is what is the fee
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structure like for equity multiple well
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most of these platforms charge an annual
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asset management fee of around one
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percent now equity multiple actually
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charges a much lower fee of just 0.5%
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however they do also receive 10% of the
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investor profit
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as well so some people are a fan of this
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type of structure because in this sense
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equity multiple in your goals are
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aligned which is essentially to make
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money so overall equity multiple seems
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like a pretty solid platform out there
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for accredited investors looking to
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invest in high quality real estate deals
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and I really like the fact that they are
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backed by mission capital which has you
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know over a decade and a half of
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experience in the real estate industry
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and this is not something we've seen
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with many other crowdfunding platforms
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out there because these are newly formed
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companies it's also great that they
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offer a variety of different deals on
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the platform that are going to suit
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different risk appetites so if you are
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looking for a higher risk higher return
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you have equity investments if you're
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looking for lower risk lower return they
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offer debt investments as well and
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projects in between so there's a variety
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of different options that you have
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available to you one thing to keep in
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mind is that although that fee is lower
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than most other platforms out there they
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do also get 10% of all of the profits
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they earn for investors so you may or
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may not be a fan of that fee structure
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and then of course there are a few
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things that you should understand about
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any crowd funded real estate platform
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before you invest first of all you
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should understand that these are rather
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illiquid investments and that liquidity
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is not guaranteed if you're looking for
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a highly liquid real estate investment
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you should stick to your publicly traded
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wreaths
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however these private investments often
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have a number of different advantages
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and in many cases they often have higher
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returns than these publicly traded
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wreaths well you do have to understand
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that as an investor liquidity is not
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guaranteed and you should be willing to
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stick around for the entire duration of
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that investment and in most cases that's
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going to be about a 5 year time horizon
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however it may be a shorter time horizon
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if this is a strictly debt investment so
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if you want to learn more about equity
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multiple the link is down in the
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description below and you guys can learn
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more and see if this platform is a good
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fit for you but thanks so much for
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watching this video I hope you enjoyed
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it and I will see you in the next one
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