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I was poking through this paper (yep, one source only!).

As I understand it, it says that publicly traded US REITs in general don't seem to track US housing prices, once you control for some basic things that it's pretty easy to get exposure to. Just from the eye test, comparing a housing price index to a few countrywide real estate ETFs and REITs, it looks like they somewhat track housing prices but maybe track the S&P more. (I didn't compare to other things like rental income, tax stuff, etc).

Assuming you agree with all that, I was wondering whether (or under what circumstances) you would expect similar behavior from real estate crowdfunding platforms. As a layperson, my presumption would be that

  • different assets (crowdfunding, public REIT, actual property, etc) will be in different market segments and stuff;
  • there are lots of different kinds of assets offered by crowdfunding platforms;
  • however, all other things being equal, the crowdfunding platforms would be relatively more insulated from the general sorts of things that push on both the S&P and publicly traded REITs/ETFs;
  • so maybe the returns to crowdfunding platforms would approximate the returns to buying property more closely than publicly traded REITs.

Does that seem right? If you think the answer depends on a few important factors, what are those factors?

I'm thinking about the US, but other places are interesting too.

I see a few questions here on real estate vs REITs. I think they're relevant to my question but don't quite address it, since (if I'm not mistaken) most crowdfunding offerings are kind "in between" REITs and property.

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    I bet REITs are much lower risk than crowd-funded investments.
    – RonJohn
    Jul 5 at 20:02
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    Crowdfunding is a general term that doesn't really say much. When comparing investments you need to understand the underlying instruments and contracts, not just the buzzwords used to describe them in general. REITs are just as crowdfunding as anything else, so what exactly are you comparing them to?
    – littleadv
    Jul 5 at 20:30
  • @littleadv You're right, I guess public REITs are also crowdfunded (I didn't think of that). When I said "crowdfunding platforms," I guess I should have been more specific. I'm referring to online platforms that have fairly high barriers to entry compared to the stock market, but fairly low barriers to entry compared to most private funds. There's a ton of variation within that group, but I'm not necessarily looking for an answer that covers the whole group. Within that group, I'm interested in aggressively marketed companies using this buzzword, since they seem to have some common features.
    – capet
    2 days ago
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    care to provide an example?
    – littleadv
    2 days ago
  • Yeah, derp--I should have done that before. The ones listed here are a good example, and this article is a good example of the buzzwordiness you described: investopedia.com/best-real-estate-crowdfunding-sites-5070790
    – capet
    2 days ago

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