Elevate Cash Overview: What We Know So Far

What Is Elevate Cash?

Elevate Cash is an actual property crowdfunding platform that started in 2020 and operates out of Newport Seaside, California. In keeping with its web site, the corporate is on a mission to democratize actual property investing by bringing personal actual property offers to non-accredited buyers.

With a $100 minimal funding requirement, Elevate Cash actually makes it straightforward for buyers to get began. However on the time of writing, the corporate solely owns two properties in its REIT, which presents a number of considerations and dangers that we will define under.

What Does Elevate Cash Provide

The goal investor for Elevate Cash is somebody who desires to diversify their portfolio with actual property and to obtain month-to-month distributions for revenue. It gives its personal REIT, which at present has two properties and extra on the way in which in keeping with Elevate Cash’s web site.

Elevate Cash REIT

On the time of writing, Elevate Cash has one REIT you’ll be able to spend money on, appropriately named the Elevate Cash REIT. However this REIT solely has two properties:

• 8500 McCart Ave: Situated in Fort Price, Texas, this industrial property is at present rented by Household Greenback and generates roughly $11,600 in month-to-month rental revenue.
• 538 St Andrews Highway: Situated in Columbia, South Carolina, this property is a gas station and comfort retailer combo that generates roughly $9,700 in month-to-month rental revenue.

A REIT is an organization that owns or operates income-generating actual property. By legislation, REITs are required to distribute not less than 90% of income to shareholders. This makes them a preferred fixed-income funding, and there are many personal and public REITs on the market.

The truth that the Elevate Cash REIT solely has two properties is unquestionably trigger for concern. To be clear, Elevate Cash may be very a lot a startup and is within the newbie section of constructing out its actual property holdings. This requires capital, fundraising, and time. For now, the corporate is in its infancy, becoming a member of the ranks of different new gamers within the actual property crowdfunding house like Landa.

Elevate Lens+ Investing Technique

On its web site, Elevate Cash explains the way it sources actual property offers by utilizing Elevate Lens+, its “proprietary monetary mannequin used to judge all potential actual property investments.”

I do not know what’s proprietary about shopping for two industrial buildings and renting them out to a gasoline station and greenback retailer, however perhaps that is simply my skeptical nature shining by way of.

In any case, Elevate Cash explains the way it values properties primarily based on a number of components: lease, tenant, location, and 360 view.

Once more, I am attempting to stay goal, however the Elevate Lens+ web page appears like a web page of jargon greater than the rest. For instance, it describes the 360 View issue as together with its “skilled opinion and insights the place we think about each quantitative and qualitative components in figuring out our funding determination.”

So in different phrases, it is a rating issue that considers different rating components. However we, the buyers, do not get to know what these components are. Not an important promote if you happen to ask me.

Month-to-month Dividend Distributions

One side I like about Elevate Cash is that it goals to pay 6.5% in annual dividend distributions to shareholders. And it additionally pays out dividends month-to-month, which is good if you’d like regular, mounted revenue. You possibly can reinvest your dividends in further shares as effectively, or money out.

On the time of writing, Elevate Cash has paid out dividends for 13 months in a row. Nevertheless it additionally explains that “dividends are declared by our REIT’s Board of Administrators and aren’t assured.”

Incomes 6.5% in annual dividend yields is actually an honest return on this planet of actual property. Nevertheless, Streitwise, which is a extra established participant, has had a 9.1% dividend common since 2017. If it have been me, I would go along with Streitwise over Elevate Cash if I may swing their $5,000 minimal funding.

Low Minimal Funding Requirement

Elevate Cash permits you to begin investing with simply $100. And you do not have to be an accredited investor to take action. This makes it a viable strategy to spend money on actual property with out a lot cash and to additional diversify your portfolio.

Rivals like Arrived Houses even have a $100 minimal, however many extra established crowdfunding corporations require $1,000 or extra to start investing.

Share Repurchasing Program

You possibly can promote your shares again to Elevate Cash on the authentic buy worth throughout the first 90 days of shopping for them. Afterwards, Elevate Cash will nonetheless repurchase shares, however you’ll be able to pay early-sale penalties:

• 90 Days to One 12 months: 3% administrative cost.
• One to Two Years: 2% administrative cost
• Two to Three Years: 1% administrative cost
• Longer Than Three Years: No administrative cost

Usually, actual property is a extremely illiquid, long-term funding. However this repurchase program helps enhance the liquidity of Elevate Cash’s REIT.

That stated, you must nonetheless view Elevate Cash as a possible long-term holding. The repurchase program is not assured, and Elevate Cash can droop or terminate this system if it provides 30 days of discover.

Elevate Cash Charges

Elevate Cash costs a month-to-month REIT administration charge that is 1/2 of 0.5% of the REIT’s property, which is roughly 0.042% monthly. Elevate additionally pays an affiliate that sources, purchases, and manages REIT properties, though it isn’t clear what this charge is.

Lastly, Elevate Cash’s broker-dealer, Dalmore Group, earns between 0.25% to 1% on all REIT shares bought relying on the full transaction quantity. You possibly can learn a whole breakdown of charges and particulars within the providing round Elevate Cash filed with the SEC.

This month-to-month charge construction is a bit completely different from most crowdfunding platforms, and it’s kind of unclear how a lot Elevate Cash pays its affiliate. However the charges appear just like many different industrial actual property investing platforms.

Historic Efficiency

Since Elevate Cash is such a brand new firm, there is not a lot historic efficiency information to go off of. The corporate has met its distribution targets for the final 13 months, which is an effective signal. Nevertheless it’s nonetheless an extremely early-stage firm, and prior outcomes aren’t a assure for future efficiency with any investing platform.

Is Elevate Cash Protected?

Because it’s such a brand new firm, I do not assume Elevate Cash is the most secure funding. In reality, in its SEC choices round, Elevate Cash even states that considered one of its predominant danger components is that it has “restricted working historical past and established financing sources.”

On this part, Elevate Cash additionally says that it was “integrated within the State of Maryland on June 22, 2020 and, as of December 31, 2021, we’ve solely acquired one property with the proceeds from this providing. Our advisor has no prior expertise within the QSR, ACW or CS markets, however will name upon the substantial industrial actual property market information and expertise of its officers and workers.”

So in different phrases, Elevate Cash has no observe document, restricted financing, and an advisor with restricted expertise. And the shortage of financing is a severe danger for progress, since with out money, Elevate Cash cannot proceed to buy multi-million greenback industrial actual property properties.

From a tech perspective, Elevate Cash makes use of Plaid to securely join your checking account, so this half checks out. However from an funding danger perspective, I feel buyers ought to consider carefully earlier than leaping within the deep finish with Elevate Cash.

How do I Contact Elevate Cash?

You possibly can contact Elevate Cash by emailing assist@elevate.cash or by utilizing the client assist chat widget on its web site. Its contact web page additionally permits you to schedule a time for a telephone name when you’ve got questions.

Greatest Options

I like that Elevate Cash is offering month-to-month distributions to shareholders, and the $100 minimal funding minimal may be very newbie pleasant.

That stated, I will not be investing in Elevate Cash personally. The corporate is solely too new in my view, and I do not assume there’s sufficient upside to justify the dangers. And that is very true since there are many different, extra established actual property crowdfunding corporations you’ll be able to make investments with:

Fundrise is considered one of our favourite alternate options, and its $10 minimal funding requirement means anybody can get began. Plus, it pays out quarterly distributions and likewise has low charges and a secondary market for shares.

As for Streitwise, it has an extended observe document than Elevate Cash and pays greater dividends. The primary draw back is that you simply want $5,000 to begin investing.

Lastly, RealtyMogul is one other platform you’ll be able to think about if you’d like a mixture of REITs and particular person offers. It additionally has a better minimal funding, however it’s been in enterprise since 2012 and has considerably extra properties than Elevate Cash.

The Backside Line

I’ve researched and written a few lot of actual property crowdfunding corporations over time. And in the previous few years, there’s additionally been a surge of recent crowdfunding corporations within the house, together with the likes of Elevate Cash, HappyNest, Arrived Houses, Ark7, and others.

In my view, most of those crowdfunding platforms aren’t price investing with. There is a race happening to lift VC cash to amass properties, and corporations like Elevate Cash aren’t maintaining with solely two buildings.

For buyers: why would you danger your hard-earned cash on an actual property startup that is doing the identical factor, roughly, as extra established corporations like Fundrise or promising up-and-comers like Arrived Houses?

The underside line is that there is not a lot upside for being an early adopter with a variety of these new actual property investing platforms. You aren’t getting greater returns, particular remedy, or some bonus that the extra established corporations cannot present. However you do tackle extra danger.

I hope I am mistaken about Elevate Cash and in 5 years time it is up there with the bigger gamers within the house. However for now, I feel buyers ought to tread rigorously and assume very exhausting earlier than investing.