Investors look for many opportunities to generate positive returns with their cash. While stocks and bonds get the most attention, investors can also pour their money into real estate properties. Although housing prices have been rising, Homeshares makes it easier to enter the industry while capitalizing on home equity agreements. This new real estate model is gaining more attention and can result in solid returns for your portfolio. These are some of the reasons you may want to invest with Homeshares.
5 Reasons to Invest with Homeshares
- Access to a High-Growth Institutional-Grade Asset Class
- Strong Risk-Adjusted Returns with Downside Protection
- Passive Real Estate Exposure with Long-Term Appreciation
- True Diversification
- Backed by an Experienced Team & Proven Track Record
1. Access to a High-Growth Institutional-Grade Asset Class
The home equity market is almost three times as large as the mortgage industry and larger than the U.S. GDP. Home equity agreements (HEAs) offer homeowners an attractive value proposition that can make them more popular. They don’t have to make monthly loan payments or contend with high interest rates. HEAs provide upfront capital without increasing a homeowner’s immediate financial obligations.
Home equity agreements (HEAs) expose investors to the $35 trillion U.S. home equity market. This industry is normally reserved for institutional investors, but Homeshares makes it accessible to accredited investors for only $25,000.
Homeshares targets annualized returns of 14-17% IRR over a typical holding period of four to six years, offering investors a unique opportunity to participate in the home equity market with strong potential for growth and attractive risk-adjusted returns. That’s a higher annualized return than most stocks and real estate properties.
2. Strong Risk-Adjusted Returns with Downside Protection
Homeshares combines enticing annualized returns with significant downside protection. The investment firm states that a house would have to depreciate by more than 45% for an HEA contract to lose money. Given real estate’s resilience in various market cycles, that offers a good margin of safety.
Most investments do not offer that same level of protection. If a growth stock you recently bought loses 45% of its value after you buy it, you have lost 45% of your investment. It’s the same thing with owning real estate. However, the unique structure of home equity agreements makes it harder to lose money on this investment compared to other opportunities.
3. Passive Real Estate Exposure with Long-Term Appreciation
One of real estate investors' biggest fears is a tenant becoming a squatter and destroying their property. Tenants can also file lawsuits if things don’t go well. Even if everything goes smoothly, you must regularly visit the property or hire a manager.
One of the main reasons people don’t get into real estate is the workload. This apprehension can cause investors to miss out on many great opportunities. While REITs are one option, their dividend distributions are treated as ordinary income, which results in higher taxes.
Homeshares offers a more accessible path to real estate with better tax treatment than REITs. Furthermore, you’re getting exposure to owner-occupied homes. A homeowner has a much stronger incentive to keep their property in good condition than a tenant on a one-year lease. They are also likely to cause fewer problems, if any at all.
HEA investors also benefit when real estate properties gain value. Their stake in the property goes up, increasing the amount investors can generate from each property.
4. True Diversification
Most investors think they're diversified with a mix of stocks, bonds, and perhaps some real estate exposure through REITs. But these assets often move in lockstep during market volatility, leaving portfolios vulnerable.
Home Equity Agreements offer something different - direct access to the residential real estate market through a structure that's neither debt nor traditional property ownership.
Unlike REITs and other real estate funds that correlate with broader markets, HEAs provide pure exposure to home price appreciation without the burdens of property management or reliance on rent payments. This makes them particularly resilient against many of the economic factors that affect traditional investments.
The math speaks for itself: American homeowners' equity has grown by 211% since 2013, outperforming many traditional asset classes while following different market cycles.
When markets zigzag, true diversification means owning assets that move independently of each other - precisely what home equity investments bring to truly diversified portfolios.
5. Backed by an Experienced Team & Proven Track Record
Any new investment is difficult at first, but when you work with Homeshares, you get to join forces with experts in the industry. The financial firm’s team is well-versed in real estate, fintech and capital markets.
Homeshares has already originated $35 million in HEAs and has under management $22 million in HEA assets. This track record has helped Homeshares become a trustworthy option for homeowners and a profitable choice for investors.
Homeshares U.S. Home Equity Fund
Homeshares U.S. Home Equity Fund offers investors exposure to the financial firm’s home equity agreements. The fund has a five-year term and aims for an annualized return of 14% to 17% during that time. The minimum investment is $25,000, and the maximum offering is $100 million.
Investors who buy shares in the U.S. Home Equity Fund will be exposed to hundreds of HEAs covering nine states. Most of the homes are in the southern United States, and the total asset value is $10.3 million.