Although Holdfolio has become a bigger player in the world of real estate crowdfunding over the past several years, it has remained largely unknown. To find out whether Holdfolio is really legit I did a lot of research and invested in some of Holdfolio’s projects. Here’s my verdict:
Holdfolio is a legitimate real estate syndicator. Properties are sourced off the market or from private sources and offered to investors at beneficial terms. Investors become LLC members and part-owners and frequently Holdfolio co-invests a significant amount.
In this blog post, I’ll go over why I believe Holdfolio is legit and the reasons behind my conviction. We’ll also go over exactly how Holdfolio works and how they make money. I’ll also address the claim that Holdfolio is a scam. Let’s get into it!
Why Holdfolio is legit
After hours of research and a significant amount of personal capital invested, I have come to the conclusion that Holdfolio is a legit company that offers great real estate deals to everyday investors. Let’s look at some of the evidence:
- Personal Experience: Probably one of the weakest arguments but an argument nonetheless is the fact that I have been paid consistently from my investment with Holdfolio. All projects have returned between 5-10% cash-on-cash annually and several are being sold with an ROI of 15-30%.
Here’s an overview of my Holdfolio holdings and distributions:
As you can see I have received consistent and sometimes increasing quarterly distributions. In some cases, I have also received a partial return of capital.
- Legal Compliance: While also not being definitive proof, a well-maintained legal structure can help prevent fraud and force regulatory oversight. Every single offering has been registered with the SEC by Holdfolio.
You can view an exemplary filing here and I will also include a screenshot below:
You’re looking at the SEC filing for Cobble Hill LLC which is a multi-family real estate asset in Texas (one in which I have invested in) and at the bottom of the page, you’ll find an overview of related listings all filed by Holdfolio.
- Great Reviews: Another indicator that Holdfolio is a legitimate company are the stellar Google reviews. While these can theoretically be faked, they all seem to have come from satisfied investors who have been working with Holdfolio for some time.
As you can read from the screenshot above, investors say things like: “Great service/professional staff, regular communication, solid returns, and consistent new investments to be part of. Highly recommend.”
And while all of this evidence is not definitive by any means, it is a strong indicator that Holdfolio runs a legitimate business and is not a scam. Now that we’ve established Holdfolio’s legitimacy let’s look at how Holdfolio actually operates. For a more in-depth look also check out my Holdfolio review.
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How does Holdfolio work?
Holdfolio operates as a typical real estate syndicator. Properties are sourced by Holdfolio and offered to investors alongside their own investments. Investor get the chance to acquire a share in the LLC that owns the property. Distributions to investors are made on a quarterly basis.
- Property Under Contract: Before any offering is made to investors, Holdfolio scours the market for good value-add deals. Once these assets are under contract the funding needs to be secured.
- Investor Offering: Once under contract, properties are offered to investors at a minimum buy-in of $20,000-25,000. With this investment, investors become Class B members in the LLC that owns the asset and are entitled to receive profit distributions.
- Deal Closing & Co-Investment: When funding is secured from investors, Holdfolio or the leading sponsor will typically co-invest anywhere from $100,000 to $500,000 in the asset and close the deal with the seller.
- Distributions: When Holdfolio takes over operations from the previous owner, rental income will be distributed to investors starting within the next one or two quarters. These distributions can vary depending on the occupancy and collection rate.
- Sale of Property: Once the property is sold, proceeds from the sale will also be returned to investors and concludes the investment cycle. Over the past few years Holdfolio has achieved and incredible average internal rate of return (IRR) of 20%+!
The five steps above describe the typical deal cycle and are repeated a couple times each year. Currently, Holdfolio has a new deal on offer about once every quarter.
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How does Holdfolio make money?
Holdfolio mainly makes money from the profits of the multi-family asset that are split with investors. A typical profit split may be 70/30 whereby 70% of profits are paid out to investors while the sponsor (Holdfolio) receives 30%. This includes profits from rental income as well as from the sale of the property.
In addition, Holdfolio may have separate deals with sponsors and receive a one-time fee or commission for referring investors to them. This is different with every asset and depends on whether Holdfolio is the leading sponsor on a given deal.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
Is Holdfolio a scam?
With all this said above it is highly, highly unlikely that Holdfolio is a scam. They operate as a legitimate business entity and deserve to be treated as such. Of course, nothing in the world of finance is 100% certain but else there would nothing worth investing in.
When it comes to real estate syndication Holdfolio and their team are as good as it gets.
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Holdfolio is a legit business that operates a complex real estate crowdfunding platform. In addition to my personal experience, the legal compliance and excellent reviews from other investors may give you some peace of mind that Holdfolio is not a scam.
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4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
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To see all of my most up-to-date recommendations, check out the Recommended Tools section.