Patch of Land Review in 2023: Diverse Mix of Properties

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Do you dream of becoming a real estate mogul and enjoying the ensuing financial freedom and success? Unfortunately, a lot of people just do not have the financial resources to invest in Manhattan skyscrapers. However, you don’t have to lose all hope. This is because you still have many great opportunities in order to make smart and prudent property investments that may pay off in big ways.

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This is where Patch of Land comes in. The platform is opening up a world of excellent possibilities for ambitious people and investors like you. We’ll help you know more in this Patch of Land Review.

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Patch of Land Overview

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Patch of Land is a popular Peer-to-Real-Estate (P2RE) lending marketplace. It was founded in 2013 in Los Angeles, California. The platform is suitable for real estate investors as it matches institutional and accredited investors seeking short-term, high-yield, asset-collateralized investments with borrowers looking for more consistent and timely sources of funding for rehabbing residential and commercial properties throughout the US.

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Patch of Land’s goal is to serve local communities by helping the residents fund the renovation of older properties. It is worth noting that since its establishment, Patch of Land has lent $725 million in real estate loans. Also, you should know that Patch of Land is one of the first crowdfunding platforms that focus purely on real-estate loans instead of equity or debt.

Patch of Land boasts the ability to earn as much as 12% of your investment back in just a single year. The company offers many types of loans. Some of them are private commercial loans, short term bridge loans, refinancing, long term rental property loans, and fix and flip loans.

The company aims to solve issues and problems related to real estate private lending, like investing as a retail client. Patch of Land leverages the latest technology in order to provide low-minimum property investing opportunities.

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How does Investing Work on Patch of Land?

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Patch of Land works simply for investors. It uses traditional underwriting procedures and takes on a specific level of financial risk in exchange for a fee. The company offers a full and thorough market evaluation and assessment of the performance of a specific asset.

Patch of Land specializes mainly in pre-vetted residential properties, such as houses, that need rehab. However, it is worth noting that the company also offers loans on some commercial properties as well as small apartment buildings.

The best thing about Patch of Land is that it only invests in properties that meet all its underwriting guidelines, showing strong potential for high return, which is impressive. Keep in mind that the data management and risk assessment technology that the company uses allows real estate projects that do not fit the profile of conventional lenders, such as banks, to receive the funding they need in order to get started. It is worth noting that residential investments are mainly for short-term loans to fix and flip houses. On the other hand, commercial investments are typically equity purchases to purchase and hold.

Note that the minimum investment is $5,000, while the account fees range from 0% to 3%. Also, investment duration is from 1 month to 36 months, and there are no prepayment penalties.

Do you want to know how investing works in other similar real estate platforms? Check out Realty Mogul Review and Origin Investment Review. 

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Who Can Invest?

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Although the company is definitely trying to open up the exciting world of real estate investing to a much wider population, not all investors can participate. Keep in mind that you must qualify as an accredited investor in order to participate.

What does this mean? It means that you’ll have to earn $200,000 (at least) annually for 2 years in a row. Also, it is worth noting that your net worth must be $1 million (at least), excluding the total value of your home or primary residence, to qualify as an accredited investor.

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Patch of Land Investments

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Investments on Patch of Land range from 1 month to 36-month loans. However, keep in mind that not all maturity options are available at all times. This is because of their deal pipeline. So, if the company is not receiving requests for a specific type of loan, then it cannot offer it.

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You will be able to see a variety of maturity options and choose the one that meets your needs. Also, you can see the complete list of investments which the company makes available publicly.

It is worth noting that the interest rates on these investments are mostly around 10% to 11%, though they can be as high as 12% and as low as 7%.

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Patch of Land Fees and Minimum Investment

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You should know that the company does not list a minimum account amount; however, it does have a minimum requirement of $5,000 for each real estate loan. Loan notes range from thirty-days to 3-year maturities, and the average loan term is between 6 months and 8 months. Keep in mind that the short-term time horizon of the investments can be a problem for some investors.

This is because investing on an average period of only seven months means you have to constantly roll your real estate investments over into new loans.

As an investor, the good news is that you don’t have to pay any setup or registration fees in order to participate in the deals. However, Patch of Land mentions that it might charge investors a fee of about 1% to 3% of the loan amount. This helps cover administrative costs and is on par with what other companies and competitors charge.

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Benefits of Patch of Land

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The Patch of Land’s platform is quite innovative. For example, you can easily complete all your transactions as well as view documents through the company’s mobile platform.

Transparency

One of the best things about Patch of Land is that the company is extremely transparent with its fees as well as the documentation of its properties. This is unlike most other crowdfunding websites on the market. For example, the company provides you with detailed and comprehensive information on every project. This allows you to do your own due diligence before investing.

No Transaction Fees

Unlike most other crowdfunding platforms, the company doesn’t charge transaction fees or campaign success fees.

Short-term Investments

Patch of Land specializes in investments ranging from 12 months to 18 months? These are generally considered safe real estate investments.

Auto-invest Available

Autoinvest is another excellent feature as it can seek new investment opportunities. This feature allows you to automatically participate in first-lien real estate loans based on pre-selected investing criteria.

Access for Non-US Citizens 

You may know that most P2RE websites exclude non-US citizens. However, this is not the case with Patch of Land. The company is happy and willing to entertain investors worldwide as long as these investors have a US bank account.

Properties Nationwide

Patch of Land’s large and diverse portfolio spans the whole nation and gives you plenty of choices regarding where to invest. Currently, Patch of Land is able to fund real estate projects in all states except Arizona, Nevada, Utah, South Dakota, Idaho, and Minnesota.

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This is how Patch of Land’s diversification looks like. It can fund real estate projects nationwide across 44 states. The states with Patch of Land activity are in green.

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IRA Accessibility

You may know that a self-directed individual retirement account (SDIRA) is a kind of individual retirement account (IRA) that carries various alternative investments that other brokers normally prohibit.

For example, you can’t invest with IRA funds held with a standard broker. However, you can invest in Patch of Land deals if you have a self-directed IRA. This means that the company offers opportunities that are appropriate for seasoned investors looking to diversify their investments.

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Patch of Land Customer Support

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Patch of land provides you with at least 4 different email addresses, telephone number and fax number, and a contact form in case you have any questions about their services. So, getting in touch with the company is a breeze. We think that the message the company is trying to convey is that it is proud of its highly accessible customer support. Note that this is a refreshing change since too many crowdfunding outfits often hide behind anonymity.

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Who is Patch of Land Most Suitable for?

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There is no doubt that Patch of Land has an excellent and diverse mix of properties, which makes it best for the following types of investors:

Active Investors

The company’s mix of residential as well as commercial properties, allows you to fully customize your portfolio.

Investors with a Diverse Investment Portfolio

If you are an investor with a high percentage of commercial properties, then Patch of Land’s high number of residential properties gives you an opportunity to diversify your portfolio.

Newly Accredited Investors

If you are a new investor, the low minimum investment amount allows you to build your portfolio without really breaking the bank, which is excellent.

Non-US Residents

Note that Patch of Land is one of the few real estate investing platforms on the market that is open to non-US residents.

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If you think Patch of Land isn’t for you, read our Streitwise Review and this top 10 real estate crowdfunding companies to discover more platforms.

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Patch of Land Drawbacks

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High fees

Fees average from 0% to 3%, which are likely to cut into your investment returns.

Investment Risk

Your investment is at risk of loss due to many factors including decline in real estate prices and borrower mismanagement.

Accredited Investors Only

Although some competitor websites are starting to open up their investments to most people, Patch of Land is still limited to accredited investors.

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Final Thoughts

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Patch of Land provides a wide variety of investment opportunities for various types of investors, and many of its deals are paying from 8% and 12% in interest, which is impressive. This is why you should consider this platform as an effective means of diversifying your portfolio to include both residential and commercial types of real estate. The company also provides extremely accessible customer service. Patch of Land is difficult to top when it comes to funding and approving real estate deals swiftly and efficiently.

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