Rich Uncles is a real estate investing platform that is seeking to make investing in real estate easy for the average person. They have a user friendly platform that allows you to invest directly in real estate deals.
The cool thing about Rich Uncles is that you don't have to be an accredited investor to use their platform - so they have products and services to meet every real estate investor's needs and abilities.
Plus, they also have one of the lowest minimums to get started! Check out our full Rich Uncles Review and get started with Rich Uncles here.
- Only $5 minimum to get started investing
- Open to both accredited and non-accredited investors
- Monthly dividend payouts
Who Is Rich Uncles?
Rich Uncles is a crowd-sharing real estate platform. You can find them at RichUncles.com. They are located in Costa Mesa, CA. The company is run by Ray Wirta (Founding Investor) and Harold Hofer (CEO). Both have extensive real estate investment experience.
Rich Uncles was founded on Ray Wirta’s idea of, “real estate investing for everyone.” Many crowd-sharing real estate investment sites require high minimums, accredited investor status, and high fees to invest with them. Rich Uncles doesn’t require any of those. Since there aren’t salespersons working on commission, their fees are virtually zero. Marketing is done through ads, social media, SEO, and newspapers. This helps to drastically cut cost.
"Our goal is to make investing in income-producing commercial real estate an easy and user-friendly experience,” said Hofer in a press release. “We want to reach folks that are internet savvy, and that routinely engage in commerce over the internet.”
Hofer continued by commenting about their cost savings: “Our method of distribution is the internet and our web site. We have eliminated the standard 10% commission. Our shareholders will have a significantly greater percentage of their initial investment actually invested in real estate assets.”
How Does Rich Uncles Work?
Investors register through the website and go through a qualification process. To qualify, you should have a family income of $75,000 or a net worth of at least $250,000.
Once approved, you purchase shares in a non-traded REIT. This REIT will pay dividends each month. Depending on when you purchase shares during the month, the monthly payment will be prorated. You can sign up to have dividends reinvested or paid out as cash. Just like any investment, ongoing dividends payments aren’t guaranteed.
Monthly payments come from rents collected by Rich Uncles from tenants. To help reduce the risk of nonpayment, Rich Uncles screens tenants for only those who are creditworthy.
A non-traded REIT is different from a REIT that trades on public exchanges (i.e., stock market). Private REITs are far less liquid. Price discovery is not known until the next sell. These REITs are also meant to be held for years.
Just because Rich Uncles’ REITs don’t trade on a public exchange doesn’t mean they are private. They are in fact public because the REITs are registered with the SEC, allowing investors to view the offerings.
There isn’t a secondary market for Rich Uncles’ REITs. Meaning, you’ll have to sell your shares back to Rich Uncles.
Rich Uncles has two main REITs: their National REIT, which requires a minimum investment of $500, and their Student Housing REIT, which requires only $5. The National REIT requires 50% equity properties. This is similar to a 50% down payment and helps to reduce overall risk.
The Student Housing REIT requires a minimum investment of only $5. Properties purchased by this REIT are residential multi-unit housing, also called student housing. These properties are within one mile of a major NCAA Division I university that has at least 15,000 students enrolled. The strategy is that there will always be demand for housing at these universities.
There are some limitations on availability for the National REIT. It is currently available in these states: CA, CO, CT, FL, GA, HI, ID, IL, IN, KY, LA, MT, NH, NV, NY, SD, TX, UT, VT, WI, and WY. The Student Housing REIT is available in all states.
An additional risk reduction strategy that Rich Uncles uses is to purchase properties across the United States. This reduces concentration in any specific geographic location. In other words, their property portfolio is geographically diversified.
What Kind of Returns Can I Expect?
Rich Uncles includes a hypothetical earnings calculator on their home page. It’s just a slider to adjust the amount you invest. If you invest $1,000, earnings over five years will look like this:
- Year 1: $1,094
- Year 2: $1,196
- Year 3: $1,308
- Year 4: $1,431
- Year 5: $1,565
By the end of the fifth year, your account will have earned $565. These earnings are based on 7% annualized reinvested dividends over the five year period with a 2% annual property value appreciation.
Is Rich Uncles Right for You?
Investing in real estate can be very intimidating for beginners. There is having to deal with tenants, ongoing building maintenance, contractors who may or may not show up when scheduled, evictions, and the list goes on. It can turn into a full-time job.
With Rich Uncles, they handle all of the above hassles. It’s their headache now and not yours. If you aren’t sure which property to invest in, that part is covered as well.
Rich Uncles doesn’t allow you to choose which property to invest in. You simply choose one of their two REITs and collect dividends. The Student Housing REIT allows anyone to get started in real estate investing for a very small amount.
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