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Frequently Asked Questions

Why should I invest in real estate?

Real estate is an attractive asset class for many reasons:

1. Simple Asset class
2. Tax benefits
3. Passive Income
4. Appreciation
5. Inflation Hedge

Read more: Participate in Real Estate Crowdfunding, Diversify your Portfolio

What is the difference between debt and equity investments?

In a typical real estate transaction, a buyer will purchase the property with a combination of equity and debt. An equity investment entails an ownership stake in the property. While there may be  more potential upside if the property appreciates and the cash flow is strong, the investment is also riskier.  A debt investment refers to the loan used for purchase. This investment ensures fixed income from the interest on the loan and is secured by the property.

Read more: Difference Between Debt and Equity Investments

Is there risk in investing in real estate?

There is an inherent risk in any investment and real estate is no different. When investing in a property, there is a risk that the property may decrease in value. Real estate has its economic cycles that are difficult to predict.

Read more: Default Scenarios

What is passive income?

Passive income is income received on a regular basis, with little effort required to maintain it. It usually comes in the form of earnings an individual derives from a rental property, limited partnership, or other enterprise with which he or she is not actively involved. With passive income, the individual continues to receive income regardless of whether or not he or she does any significant work. Think of it as money you can earn while relaxing on the beach.

Is investing with Patch of Land a form of passive income investing?

Yes! With Patch of Land, you simply invest money and watch it grow because you have no active role to play in the performance of the investment. Once you have made your investment choice and funds have been transferred, you can sit back and enjoy watching monthly interest distributions hit your account. This is a form of real estate investing that is hands-off, with no tenants to manage, no landlording, nothing but simple interest payments every month! 

What is peer-to-peer lending?

Peer-to-peer lending is a direct exchange between a borrower and a lender. Lenders, also called investors, are matched with borrowers, also called real estate operators. The exchange of funds happens through the Patch of Land platform, but the investor is lending his or her money to the borrower, and is able to view the borrower, his or her project, expected returns, etc. in order to determine whether this borrower is a fit for the investor’s goals, portfolio, etc.

Read more: From Crowdfunding to Peer-to-Real Estate LendingFinancing for the New MillenniumReal Estate Radio talks Peer-to-Peer Lending

Can I invest using my SDIRA?

We no longer accept investments from SDIRA entities that require a custodian to disburse funds. However, we can support investments from a "Self-Directed IRA LLC" or "Checkbook IRA," which allows you to use the LLC’s checking account feature to make investments.

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