Category Archives: Crowdfunding Real Estate

Real Estate Crowdfunding Platforms: What to Look For

Share

Equities.com | By Equity Multiple Team | August 8, 2017

Since the JOBS Act of 2012 opened the door for equity crowdfunding, dozens of startups have taken up the mantle of “real estate crowdfunding” – depending on your definition, there are now dozens to well over 100 platforms offering some form of real estate micro-investing, affording retail investors unprecedented access to real estate investments. For individual investors managing their own portfolios, the vast array of options can be overwhelming. Discerning investors are right to evaluate the landscape critically, and only pursue those investments and investing platforms that align with their strategy.

While each offers a unique focus and value proposition to investors, platforms have now consolidated into several main categories of the business model:

eREITs: Fundrise and RealtyMogul, two of the original players the real estate crowdfunding space, have pivoted to offering semi-blind funds that aggregate properties throughout the country. These investments offer built-in diversity and very low minimums, making them appropriate for less experienced investors.

Commercial equity investing: probably the closest to the original idea of real estate crowdfunding, these platforms offer CRE equity opportunities to accredited investors, allowing them to participate in high-upside, larger commercial projects. While the return potential is often great, these tend to be the long term and riskier than other RECF investments. Thus, these kinds of investments are most appropriate for investors who have time to really understand the risk factors in play, and who have at least a working knowledge of real estate equity investing

Debt investing: Some platforms take some or all of an existing real estate loan, secured by a deed on the underlying property, and syndicate it out to a network of individual investors at a fixed rate of return. Other platforms act as the lender, issuing a loan to a real estate developer or flipper. In either case, the platform’s network of investors are offered a flat annual rate of return - typically between 7% and 12% - over a relatively short term - generally 6 to 18 months. Since these investments are secured by the property and short in a term, they tend to be a good fit for more risk-averse investors.

See:

Understanding the spectrum of models can help investors prioritize those offerings that best fit their portfolio objectives, whether that be stable cash flow, preserving wealth for retirement, or opportunistic pursuit of high upside. Given the relatively low minimums, many platforms offer, there may be room in an individual’s portfolio to invest through several platforms and achieve further diversification.

Regardless of what model a platform operates under, investors are advised to take a close look at the track record and experience of the people behind the platform. Attentive customer service is a must – platforms should practice transparency and be willing and able to answer any questions investors have.

Individual Deals - What to Look For

Some platforms perform their own diligence on investments, which should give you some comfort as an investor. Even so, you’ll want to understand some key components of any deal you consider and be sure it aligns with your investing objectives before pulling the trigger. Here are some of the main things to consider:

Risk Factors - No investment is without risk, even fixed-rate, short-term debt investments. Examples of risk factors are tight construction timelines, a precarious labour market in the area, an unsubstantial track record or aggressive leverage on the part of the Sponsor who originated the deal. Again, if risk factors aren’t presented transparently, or the platform is unable or unwilling to field questions about risk factors, this should raise a red flag.

Payout Structure - While debt deals are mostly straightforward, equity investments can be much more complex. Be sure to understand where your investments fit in the capital stack, and what order you will be repaid principal and profits relative to the Sponsor and other LP investors.

Cash Flow and Liquidity - Simply looking at how many dollars you’re expected to receive over the lifetime of a deal (the simple return) or even a time-weighted return (IRR - internal rate of return), won’t give a complete picture of the timing and magnitude of returns. Depending on the business plan for the project and how the platform has negotiated and deal, you may receive distributions monthly or quarterly, and you may begin receiving cash flow from rent immediately, at some point partway through the term, or not at all in the case of a ground-up development or rehab. Similarly, repayment of principal may be projected for the end of the term, partway through the term, or piecemeal in the case of partial sales or a refinance. Be sure that the schedule of distributions and principal repayment is palatable to you given your liquidity needs.

Once again, if any aspect of the deal is unclear or doesn’t pass the sniff test, don’t hesitate to ask questions of the platform offering it.

Continue to the full article --> here

 

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

Share

How Real Estate Investing Is Spurring Millennial Home Ownership

Share

Forbes | By Christine Michel Carter | July 25, 2017

Millennials are the largest group of home buyers for the fourth consecutive year, according to the National Association of Realtors 2017 Home Buyers and Sellers Generational Trends Report. Nearly 40% of home buyers were under 36 years old.

So what’s driving the change in Millennial home ownership?

Forty-nine percent of Millennial buyers had at least one child, also according to the report. That is up six percentage points from two years ago. Also, while Millennials are not racing down the aisle, they are purchasing homes with their partners. Though marriage rates declined, the number of U.S. adults in cohabiting relationships reached nearly 18 million last year, up 29% since 2007. About half of those cohabiters (those living with an unmarried partner) are younger than 35. But most importantly, in a joint Real Estate Investment Survey with Harris Interactive, RealtyShares found that 55% of Millennials are enthusiastic about home ownership as an investment, and over half would invest in property other than their primary residence.

With all the enthusiasm Millennials have towards real estate investment, for them, it is still a foreign and confusing concept with many barriers. In fact, 70% of all Americans think investing in real estate is more difficult than investing in other asset classes. Few are aware of the options towards home ownership, such as borrowing from retirement, real estate crowdfunding or house hacking.

See: Could Real Estate Crowdfunding Help Millennials Retire Sooner?

Not surprisingly, Millennials believe technology makes the real estate investment process easier. That’s why Kendra Barnes, millennial and real estate investment coach, started The Key Resource, a digital resource educating and empowering fellow Millennials to invest in real estate. Barnes herself owns a 4-plex, duplex and single family home in Washington, D.C.- a city with a strong housing market. Today Barnes makes nearly $200,000 in annual rental income and plans to buy at least two more properties before the end of 2017 in other states. Barnes relates to other Millennials with regards to the order in which they’re making big decisions- she bought a house, got married and then invested in real estate:

We had no plans of ever buying rental property- not because we didn’t think it was possible, we just never even considered it. One day we played Rich Dad’s board game Cash Flow and it changed our lives. We realized that we were doing absolutely nothing to build wealth and at the rate we were going we’d have to work until we were old and gray. We decided to get into real estate investing and started making sacrifices that most people wouldn’t in order to reach our goals. We downsized to a one car household, saved more, and borrowed from our retirement account to buy our first property.

See also: Fintech Lures Millennial Investors Away From Asset Managers

Continue to the full article --> here

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

Share

German Real Estate Crowdfunding Market Booms

Share

CrowdfundInsider | By  | June 21, 2017

The German real estate crowdfunding market is set to more than triple in size this year. Real estate developers, asset managers, and, most recently, real estate agents are joining the fray of real estate crowdfunding platforms, trying to unseat the handful of leaders who have already established a strong leadership position in this very young market.

The road ahead for the German real estate crowdfunding market has been cleared. The threat of being excluded from the scope of application of the crowdfunding regulation, the Kleinanlegerschutzgesetzt (KASG), was taken off the table last month. The crowdfunding market can move ahead on its exponential growth path.

Exponential Growth

The German real estate crowdfunding market is very young. Although a few projects appeared as early as 2012, the market has only taken off after the entry into force of the KASG in July 2015. Most real estate projects raise funds in form of subordinated loans regulated by the KASG.

Michel Harms tracks the overall crowdinvesting industry through his crowdfunding barometer and his aggregation site crowdinvest.de which lists all crowdinvesting projects available in Germany. According to his reports, real estate accounts for 80% of the crowdinvesting market. In 2016, the market doubled in size to reach €40 million. In the first five months of 2017 alone, 51 real estate projects raised €52 million. One can reasonably expect the market to triple in size by the end of 2017.

In 2016, more than 80% of the 48 projects were residential development projects (construction, renovation, rehabilitation), half of which were located in big German cities, with Berlin being the top location. As mentioned, most platforms use the regulated subordinated loans, ahead of bank loans and bonds. The average loan duration is 21 months, the median interest rate 6%.

See: Could Real Estate Crowdfunding Help Millennials Retire Sooner?

Three leaders emerge

In the short time since 2015, three leaders have already emerged: Exporo, Zinsland and Bergfuerst, three platforms dedicated real estate crowdfunding. Together, they make up for more than three-quarters of the real estate crowdfinancing.

Exporo was incorporated in 2013 by Simon Brunke, CEO, Björn Maronde, Julian Oertzen and Tim Bütecke. The company launched its first project as Exporo GmbH at the end of 2014. Since then, the platform has broken away from the pack by raising more than €64 million cumulatively, which amounts to a market share of over 40%. The platform has financed more 52 projects, including 21 in 2017 alone. Many of these are large projects, at the upper limit of the German prospectus-exemption of €2,5 million. To fuel its expansion, Exporo recently raised €8 million from e.ventures, Holtzbrinck Ventures, Sunstone and BPO Capital.

Zinsland was founded in 2014 by Carl-Friedrich von Stechow, CEO, Dr. Stefan Wiskemann and Moritz Eversmann. The platform launched its first project in 2015. Since then, it has financed 25 projects, including 10 in 2017, for a total of €18 million. It claims 2,600 members.  To meet its aggressive growth plans the company expect to double its number of employees by year end.

Bergfürst was started much earlier than its competitors, in 2011, as an equity crowdfunding platform launched by Dr. Guido Sandler, CEO, and Dennis Bemmann. The platform launched its first real estate project in 2014 and pivoted shortly after to dedicate itself exclusively to real estate projects. To date, the platform has raised nearly 13 million to finance 20 real estate projects. Whereas most competitors require a minimum investment of €500, Bergfürst lets retail investors participate with €10.

Bergfürst transition to real estate crowdfunding is an exception. Other equity crowdfunding platforms who fund SMEs and startups, such as Seedmatch (through Mezzany), Companisto or FunderNation, have tried their hand in real estate crowdfunding with a few projects. But they seem to have given up competing with the more specialized platforms.

 

Continue to the full article here--> 

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

Share

GAME-CHANGERS: Crowdfunding real estate projects in the GTA

Share

Mississauga.com | by Louie Rosella | June 7, 2017

NexusCrowd, a Canadian real estate crowdfunding platform, has a number of projects on the go through crowdfunding, including a $12 million real estate redevelopment project announced in 2015 boasting three properties — one in Mississauga.

Real estate crowdfunding is experiencing explosive levels of growth, particularly in Mississauga and across the GTA.

NexusCrowd, a Canadian real estate crowdfunding platform, has a number of projects on the go through crowdfunding, including a $12 million real estate redevelopment project announced in 2015 boasting three properties — one in Mississauga.

NexusCrowd bills itself as the first investment platform in Canada that provides investors with exclusive access to co-invest with established real estate developers and investors in real estate deals that have reached at least 50 per cent of the funding target.

See:  Could Real Estate Crowdfunding Help Millennials Retire Sooner?

Just last fall, NexusCrowd announced it has closed its fourth real estate investment offering, raising $517,000. By partnering with Downing Street Realty Partners, NexusCrowd allowed accredited investors to participate in the development of a mixed-use commercial real estate project located in downtown Toronto.

“We have now raised over $2 million for four private real estate investments using our innovative investment platform,” said Hitesh Rathod, CEO of NexusCrowd. “Offering high-quality exclusive investment opportunities to our investors is our top priority and we are excited to announce that we are working on additional partnerships to further expand our product offering.”

NexusCrowd was part of what was hailed Canada’s first crowdfunded real estate project in fall 2015 and featured another Mississauga location.

“This type of deal is extremely exclusive,” said Rathod in a 2015 interview with The Mississauga News. “I think crowdfunding has huge potential. It just needs to be done the right way. You need to do due diligence. It can be a risky proposition and I work to mitigate risk.”

One of the three assets in the $12 million project is a 25,000-square-foot former pharmaceutical manufacturing facility at 951 Verbena Rd., in the area of Tomken and Britannia roads. The other two properties are industrial facilities in Etobicoke.

Continue to the full article --> here

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

 

Share

Fintech Platform futureshare Launches to Help Canadian Homeowners Unlock Their Real Estate Wealth

Share

Market Wired | May 18, 2017

Alternative to HELOCs and reverse mortgages means homeowners don't have to sell to tap into their home equity

TORONTO, ON--(Marketwired - May 18, 2017) - There is more than $2.9 trillion in unmortgaged real estate equity in Canada (CREA), and today fintech platform futureshare launches to help Canadians unlock that real estate wealth without taking on new debt. The company was founded in 2016 as an alternative to home equity loans, home equity lines of credit (HELOCs) and reverse mortgages and gives homeowners a lump sum free of ongoing payments and interest rates in exchange for a percentage of the home's appreciation, which can be paid out without penalty at any time or once the property is sold. futureshare's online platform is the first of its kind in Canada and is now live in beta and accepting online applications for homes within Ontario with plans to launch in Alberta, Manitoba and British Columbia by the end of 2017.

"Canada's housing market has billions in untapped equity and futureshare is giving that wealth back to Canadians to help them reduce financial stress and live happier lives. We're revolutionizing the process by giving Canadians an alternative to home equity loans or HELOCs that's interest rate and payment free, allowing them to unlock their real estate wealth and increase their cash flow," said Michael Orrbrooke, CEO and founder of futureshare. "Whether it is, for example, for home improvements, debt consolidation, for funding retirement or investing in a small business, futureshare wants to help Canadians achieve their financial goals without adding new debt."

See: Real Estate Crowdfunding - An Emerging New Asset Class

The average Canadian owes $1.67 for every dollar in income (StatsCan), and futureshare is designed to help homeowners access the equity tied up in their home without adding to their ongoing debt burden. Unlike a reverse mortgage or HELOC, futureshare doesn't require homeowners to have perfect credit scores or to fall within a specific income bracket, and it doesn't increase monthly payments. A homeowner's eligibility is based primarily on their home value and whether they have at least 25 per cent equity ownership in their home. Homeowners will be able to access on average up to 10-20 per cent of their home equity using futureshare's platform, and unlike a loan, there's no ongoing payments or interest rates.

Canada has become a hub for fintech innovation, with venture capital financing for fintech companies increasing by 74% from 2015 to 2016 (Thomson Reuters). Like other fintech platforms, futureshare's process is simple and easy to complete online. Homeowners can use the online equity release calculator to see how much of their wealth they can unlock, and once they complete the 90-second pre-qualification questions, the homeowner receives a real-time conditional offer outlining the details of the equity release amount and terms they could receive. The home is then appraised and a final offer is sent via email by futureshare to the homeowner, with the credit application and underwriting process continuing online. Homeowners receive their funds, via electronic transfer, on average within 10-15 business days of signing the final offer.

About futureshare

futureshare provides an alternative to home equity loans, home equity lines of credit (HELOCs) and reverse mortgages, helping homeowners unlock their real estate wealth without having to sell their home. The online platform provides consumers with the opportunity to receive funds based on an appraisal on their home in exchange for a portion of their homes future appreciation, meaning that homeowners have zero ongoing payments, and incur zero interest. futureshare is currently available in beta in Ontario with plans to launch in Manitoba, Alberta and British Columbia by the end of 2017. futureshare is based in Toronto, and the platform launched in May 2017.

To learn more about futureshare, visit futureshare.ca.

Social media links:

Facebook: facebook.com/futuresharedf
Twitter: twitter.com/futuresharedf

For additional information, contact:

Jamie Gillingham
Eighty-Eight
Account Manager
jamie@eightyeightagency.com
416-944-2722

SOURCE: futureshare (view release)

Share

Could Real Estate Crowdfunding Help Millennials Retire Sooner?

Share

Realty Biz News | Steven Kaufman | April 4, 2017

Crowdfunding Real Estate image

Real estate has long been lauded as a sensible investment for retirement. After all, real estate assets provide a relatively safe way to hedge your portfolio against volatility in the stock market, and they can also provide passive retirement income.

Real estate crowdfunding sites know that retirement is on the minds of many real estate investors. Many work to attract potential investors with self-directed retirements, such as an IRA or 401k, by promising the preservation of capital at an above-market rate of return. Their online platforms allow people saving for retirement to invest in real estate right from the country club golf course. It was no surprise, then, when investors began pouring retirement savings into crowdfunding.

Except for who was doing the investing, that is. Real estate crowdfunding has proven a popular choice for one of the most fickle investing groups in the marketplace: Millennials.

On the surface, it seems improbable. Millennials investing in real estate? This is a group that has been loathe to purchase homes, with less than a third of Millennials becoming homeowners compared to 64 percent of the general population. After a little analysis, however, there are powerful reasons why real estate crowdfunding appeals to Millennials—enough that more are certain to join the crowd of investors in the coming years.

See:  Fintech lures millennial investors away from asset managers

The stereotype, of course, is that Millennials are all underpaid with limited skills and few opportunities. That’s not reality, but even if it were, real estate crowdfunding has very low barriers to entry. Some of the best and most successful crowdfunding portals allow for investment minimums as low as $5,000. That lets Millennials get into the real estate investment game much earlier than previous generations.

Second, real estate crowdfunding is an investment option that allows Millennials to bypass banks. Having come of age during the Great Recession, many Millennials don’t trust financial institutions or Wall Street firms. They do, however, see the need to protect their money from the kind of financial breakdowns that hurt their parents’ retirement plans nine years ago by investing in hard assets. Real estate crowdfunding offers the chance to do just that.

The importance of diversification is another lesson that Millennials learned through observation. Many aren’t willing to rely on the promise that property values will go up indefinitely. They’d rather spread their money across many assets, just to be safe. Real estate crowdfunding makes diversification easy.

See:  Open letter from Millennials to the Real Estate Industry

One of the Millennial attributes that confounds marketers the most is their disinterest in ownership. From albums to cars to homes, Millennials are buying less of everything than the generations preceding them, and it’s not just because they have less money to spend. Many young people prefer to connect than buy, and they want the way they spend their money to say something about how they see themselves. Ownership doesn’t always align with Millennials’ priorities, but investing does. Like every generation, they are determined not to make the same mistakes their parents did.

Real estate crowdfunding appeals to them because it offers the benefits of ownership without the drawbacks of commitment. It allows them to make passive, small investments in multiple properties without being tied down for years in a single home or location.

Continue to the full article --> here

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. Learn more at www.ncfacanada.org.

Share

Amar Nijjar, CEO R2Crowd, Joins National Crowdfunding Association of Canada’s Advisory Board

Share

NCFA Canada | Craig Asano | Jan 9, 2017

Amar Nijjar, Advisor, Commercial Real Estate

TORONTO, JAN 9, 2017 – The National Crowdfunding Association of Canada (NCFA) today announced that Amar Nijjar, Chief Executive Officer of R2Crowd, a leading real estate crowdfinance and investment platform, has joined the Association’s Advisory Board as Advisor, Commercial Real Estate.

Amar is the Founder of Real Crowd Capital. He is responsible for strategic direction, business development, operations, and sits on R2CROWD’s Board of Directors and Investment Committee. Amar has funded over $7 billion and underwritten over $20 billion of real estate during his career. Amar is also an Executive Vice President at JLL (formerly Jones Lang LaSalle), where he leads the Debt Capital Markets group. Amar is licensed to trade in mortgages and real estate, and holds an MBA York University and an undergraduate degree in chemical engineering.

“Amar is a highly capable professional and active in pursuing the vision of bringing fintech to Canadian commercial property markets.  He brings a vast network of experienced commercial real estate capital market stakeholders to the table and understands the value that financial innovation can generate when paired with vetted, high quality investment opportunities and the appropriate levels of technology and risk mitigation strategies”, said Craig Asano, Founder and Executive Director of NCFA Canada.

Private Capital Markets are hugely inefficient with intermediary cost of capital often times exceeding 10% of every dollar invested. This simply isn’t sustainable in the long run. While the role of an advisor can never be completely eliminated especially in a financial sale, it certainly is ripe for some disruption. However, as an industry all of the participants need to do a better job of building credibility. We need to fully engage in industry events, conferences and other ways of educating the retail investor. In this regard, NCFA is doing a great job and we all need to support them for our collective success in the industry.   Amar Nijjar, CEO, R2Crowd

 # # #

About National Crowdfunding Association of Canada

The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both social and investment crowdfunding stakeholders across the country. NCFA Canada provides education, research, leadership, support and networking opportunities to over 1500+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding industry in Canada. For more information please visit: www.ncfacanada.org.

MEDIA CONTACTS:
Craig Asano
casano@ncfacanada.org
416 618 0254

Share