Review of: AlphaFlow
Reviewed by: Eric Rosenberg
Last modified: January 11, 2018
AlphaFlow is a real estate crowdfunding platform for people who want to leave the decision-making to the pros. If you're an accredited investor, all you have to do is fund your account and let the platform handle the rest. The service works with reputable lenders and has a very strict vetting process for potential investments for your peace of mind.
Crowdfunding began as a method to fund personal loans, but it has grown far beyond the pioneering days of Lending Club. These days, crowdfunding has gained traction in real estate. It offers an opportunity to invest and profit without the hassles of directly owning investment properties.
AlphaFlow is a crowdfunded real estate platform that requires very little input from the investors. Just fund your account and AlphaFlow takes care of the rest. If that sounds exciting to you, follow along with our full review to decide if this platform is a good option for your investing dollars.
|Investment Length||3 - 12/months|
|Offering Types||Debt, Equity|
|Property Types||Residential, Single Family|
|Regions Served||15 States|
What Is AlphaFlow?
AlphaFlow is a crowdfunded real estate platform where investors fund an account and investment professionals create a curated portfolio of diverse real estate investments. It is currently open only to accredited investors. If you are interested in real estate crowdfunding, AlphaFlow is one of the simplest options on the market today.
AlphaFlow’s unique model means investors don’t do any work after funding their accounts. AlphaFlow creates an optimized investment portfolio for each account with 75 to 100 notes in at least 15 states to ensure your investments are diversified. The Optimized Portfolios target an 8% to 10% return, though that is not guaranteed. AlphaFlow invests only in projects with a maximum 75% loan to value (LTV). This is slightly more conservative than many other lenders.
Portfolios are managed by industry professionals who know what to look for in a real estate investment. Roughly 80% of reviewed loans do not pass AlphaFlow’s underwriting process and don’t get funded with investor dollars. The strict standards incorporate 50 elements that examine the borrower, property and overall market. This three-point approach ensures that only the projects following AlphaFlow’s success metrics get into investor portfolios.
AlphaFlow raised a $4.1 million seed funding round in September 2017. This funds growth, development and expansion for the two-year-old business.
How Does AlphaFlow Work?
The signup process is quick and straightforward. Once you complete your profile, AlphaFlow verifies your accredited investor status and bank account. Then it funds your account with a direct bank transfer in two to three days. The minimum investment to open a new account is $10,000.
Once your dollars arrive at AlphaFlow, its investment team picks real estate investments for you. Unlike competitors, you don’t have to sort through listings of real estate offerings and pick each project. The AlphaFlow team will choose investments for you, generally in increments of around $100 each. A typical account with a $10,000 balance will be invested in 75 to 100 loans at any given time. The investments will be in single-family residential properties.
As borrowers make interest payments, you will see them flow into your account. Interest deposits come in once or twice per month. You can choose to auto-withdraw or auto-reinvest as your account balance grows.
Users can track their portfolio holdings and performance in their AlphaFlow dashboard. Dashboards show total account value, earnings, rate of return and individual loan details on the various loans in the user’s portfolio. One of my favorite features is the map. This gives you a geographic look at your little real estate investment empire.
AlphaFlow started with three managed investment funds and has since moved into the current model. Since its inception, including the three funds, AlphaFlow has initiated 524 loans across 29 states. The average loan to value for past investments is 69.61%. The blended average weighted return generated by investors comes in just above 10%.
|Fees||1%/year||0.30% - 0.50%/year||1% on equity; up to 2% interest rate spread on debt|
|Review||—||Read the Review||Read the Review|
Benefits of Investing With AlphaFlow
AlphaFlow is ideal for investors who are interested in real estate but don’t know where to start. Some real estate investors like to have granular control over each investment. This is what draws them to marketplaces like RealtyShares and Realty Mogul.
AlphaFlow recognizes that most investors do not have extensive real estate experience. Once at the accredited investor level, it is common for investors to have owned a home or two and maybe even a vacation or investment property. But that doesn’t mean they’re ready to dive in and evaluate real estate deals.
AlphaFlow is proud to have a culture where credit matters more than volume. So it invests only in properties where it sees investors likely to earn a strong positive return. After all, if investors don’t get good returns, they will take their money elsewhere. AlphaFlow’s performance runs in line with historical S&P 500 returns and several other real estate crowdfunding platforms.
Pros and Cons
- Simple Investment — Investing in a portfolio of real estate through AlphaFlow is similar to investing in an actively managed mutual fund. Once you invest, you don't have to make any decisions.
- Low-Cost Diversification — $10,000 at AlphaFlow allows investments in up to 100 real estate projects.
- Strict Vetting — Each project is strictly vetted by AlphaFlow's team.
- Easy-to-Use Interface — AlphaFlow's user dashboard is easy to use and understand.
- Accredited Investors Only — AlphaFlow is available only to investors who meet the SEC definition of “accredited investor.”
- Fees — AlphaFlow’s 1% fee is on par with RealtyShares’ 1% fee on equity -- though RealtyShares charges up to 2% on debt. The fees are higher than competitor Realty Mogul.
- $10,000 Minimum — Accounts must be funded with at least $10,000, which presents a potential barrier to entry.
AlphaFlow is a great option for investors who want to put their money into real estate but don’t have the time or expertise to choose their own investments. Accredited investors have good odds of earning a great ROI with AlphaFlow’s reasonable fees, a solid history of returns and one of the simplest real estate investment option on the market.
While you don’t have the granular control over each investment as you do with competitors, the AlphaFlow team does an excellent job of vetting and approving each investment. And the unique model means your dollars rarely sit idle. If you trust AlphaFlow to choose the right properties, it is an industry-leading option for crowdfunded real estate investing.