Collab Review: Pros, Cons, And Alternatives

Collab is a real estate investment platform that focuses on student housing.

You can add new income streams into your life by building a diversified investment portfolio across several asset classes, including real estate.  

But traditional real estate investing can be time consuming, and often requires a large injection of capital up front. 

If you are looking for a more hands-off investment, Collab presents an opportunity. Collab makes it easy for investors to tap into the student housing real estate market through a crowdfunded investment model.

In this Collab review, we'll explore the ins and outs of the platform to help you decide if it's a good fit for your situation.

What Is Collab?

Collab is a crowdfunded real estate investing platform designed to connect investors with income-generating student housing opportunities. Through the platform, you can become a co-owner of a student housing property through the purchase of shares.

As of writing in July 2023, Collab has one investment property open for investment (almost 50% sold out, with two more coming soon.) According to Collab, more properties will be filed later. 

What Does It Offer?

Collab presents a unique opportunity for real estate investors looking for a more passive approach. Here’s a closer look at some key features of the Collab platform: 

Become A Co-Owner Through Share Purchases

Both non-accredited and accredited investors, can purchase shares of income-generating student housing properties through Collab. When you buy shares of a live project, you’ll become a co-owner of the property. In other words, you purchase shares of an LLC. You can check the project details at any time through your investment dashboard. 

No Full-Time Property Managers

Collab doesn’t have a full-time property manager on site. Instead, the platform allows any Collab member to perform optional management tasks. Members who complete the tasks are paid for their time.

As an investor, this gives you a chance to be more hands-on when you want to. But you’ll always have the option to scale back on your physical tasks. 

According to Collab, this work-sharing strategy makes the investment run more efficiently, which may result in higher investment returns over the long term. 

Income Stream

Collab pays a regular cash dividend to investors. Each month, Collab distributes 100% of all rental profits to the shareholders, so you'll receive funds in your bank account each month.

Beyond the monthly income stream, investors can also realize capital gains over time. For example, when a property is sold or refinanced, you’ll earn a portion of the proceeds.

Student-Housing Focus

Collab's focus on student-housing is unique in the world of fractional real estate investing. Their goal is to find profitable ventures that close proximity to college campuses, and Collab offers plenty of data on why they have decided to pursue this segment of the real estate market.

Collab puts potential projects through an extensive screening process. If the numbers work, then Collab will proceed to acquire the property.

Liquidity

The downside of working with a fractional real estate platform like Collab is a lack of liquidity. Once you invest, you are locked in for several years. 

That's because Collab doesn’t have a secondary market to buy and sell shares. This means you won’t be able to quickly sell your shares if you need cash. Collab is exploring an early-redemption program for those who need to cash out early, but until then, you’ll have to wait until the property is sold to see the cash value of your shares.

It's important to note that liquidity is an issue with most fractional real estate investing platforms. You can reduce this liquidity risk by never investing any money that you may end up needing to access in the short-term.

In other words, Collab is better suited to investors who are comfortable with a long-term outlook. 

Are There Any Fees?

Collab charges investors a 2% asset management fee, which comes directly out of revenues, and is based on the value of the property. 

When Collab sells a property, the company will take a 20% cut of the incremental value growth, which is the difference between the sale price and the acquisition price. This is known as the 2 and 20 model.

It's important to note that Collab owns at least 5% of the shares in all available properties, which keeps the company’s interests aligned with your own.

How Does Collab Compare?

Collab isn’t the only platform for real estate investors. But it is the only platform with a specific focus on student housing projects.

Fundrise is a Real Estate Investment Trust (REIT) that allows you to invest in multiple properties through a single holding. In addition to offering more diversification across multiple investment properties, Fundrise provides more liquidity. As an investor, you’ll have an opportunity to sell your shares up to 4 times per year with 30 days’ notice. Fundrise also charges a lower annual management fee of 1% of assets under management , versus 2% for Collab.

Arrived Homes is a crowdfunded real estate platform that invests in single-family homes. Arrived charges a 1% yearly management fee. In addition, 8% of the monthly rent goes towards property management costs. You can start investing with Arrived Homes for $100.

How Do I Open An Account?

You can get started with Collab by browsing properties on their website. If you find an investment opportunity that interests you, it’s time to buy shares. You can make the purchase with your bank account or credit card. You’ll need to sign a variety of forms to finalize the investment.

After purchasing shares, you can check on the status of your investment through the Collab dashboard at any time. 

Is It Safe And Secure?

Yes, the Collab platform is safe to use. The investment opportunities offered are regulated by the Securities and Exchange Commission (SEC), which means the company must adhere to strict reporting requirements. In addition, the company uses bank-level security to keep your financial information protected at all times. 

Note that while it's safe to invest, that doesn't mean that Collab is a safe investment. Your returns are not guaranteed, and you could lose money. That's why it's so important to diversify your investments between various asset classes, and maintain a long term mindset with your Collab holdings. 

How Do I Contact Collab?

If you need to get in touch with Collab, the company offers a contact form on its website or you can email them at support@collabhome.io. There is also a chat feature on the Collab website.  

If you prefer to connect over social media, Collab is available through Facebook @CollabHome, Twitter @CollabHomeHQ, LinkedIn @CollabHome, Instagram @collab_home, and Discord.

Who Is This For And Is It Worth It?

The ability to invest in student housing real estate projects is exciting. If this type of investment opportunity suits your portfolio, then Collab might be the right fit. The company is relatively new to the scene but seems to have a streamlined system set up for investors.

If you aren’t ready for a long-term financial investment, then Collab might not be the right choice. The lack of liquidity means you could be parting ways with your funds for several years. Before you commit to a long-term investment of this nature, it’s usually a good idea to have a robust emergency fund in place.

Check out Collab here >>

Collab Features