Key takeaways
- Syndicates and REIT present attractive offers but always require compromises in terms of liquidity, tax benefits and accessibilty.
- Real Estate 3.0 offers all the benefits of Syndicates, REIT and more in a single package.
- The DCAP ecosystem allows even non-investors to benefit from the revenue generated by the real estate operations through the $DCAP token.
Traditional
Real Estate
In order to invest in the U.S. Real Estate Market, currently, one must go through one of two ways: Real Estate Syndicates or REITs:
Large and lucrative investment opportunities
Tax Benefits
Less Liquid, longer hold terms
Difficult to qualify for
Unfair fee structure
Real Estate Syndicates
offer you the possibility to invest in physical assets including large commercial properties offering lucrative investment opportunities as well as several tax benefits, such as asset depreciation and 1031 exchange. However, these investments are largely available only to accredited investors (high net-worth individuals) and investors are locked-in for the agreed term posing a liquidity problem. Additionally, the General Partners (person charged with structuring and managing the deal) take up 30-50% of all revenue generated by the property without contributing any/or very little capital towards its acquisition.
Can invest small amounts
Pull money whenever
Diversified across properties
Dividends are taxed as ordinary income
Depreciation cannot be applied to other income
Real Estate
Investment Trusts (REIT)
are modeled after Mutual Funds that own and manage income-generating Real Estate Properties. Investors can enter the fund with a capital contribution as low as $1,000. The income generated by the properties is distributed as dividends to the investors monthly or quarterly. Although as liquid as traditional stocks, unlike a Real Estate Syndicate Investment, they do not offer any tax advantages and capital appreciation as the investors do not own any shares of the physical assets.
Comparison Chart
Features | DCAP | REITs | Syndicates |
---|---|---|---|
Tax benefits | |||
Passive income | |||
Accessible to anyone | |||
Liquidity | |||
Diversified investments | |||
Transaction transparency | |||
Seamless 1031 exchange |