September 26th, 2018
Real Estate Crowdfunding – An Emerging New Asset Class
R2Crowd | Karen Dao | March 21, 2016
The Second Annual 2016 Canadian Crowdfunding Summit (CCS2016) was held on March 3 at the MaRs Discovery District in Toronto and placed focus on the future of crowdfunding in Canada. With the newly released equity crowdfunding regulations in January, there is huge momentum and growth potential for this industry. R2Crowd, a leading Real Estate Crowdfunding platform was honoured to join Canada’s leading innovators, leaders, investors and sponsors of crowdfunding, FinTech and financing alternatives.
The summit was officially opened by Ontario Finance Minister, Hon. Charles Sousa who delivered an impactful speech to a crowd of over 400+ highlighting the importance of innovation and the need to help small businesses access capital and resource networks to help them launch and scale into viable commercial entities.
“Those who innovate and stay ahead will become leaders and those who lag will fall off the wagon" expounded Minister of Finance, Charles Sousa on emerging fintech companies.
Amar Nijjar, debt capital markets expert and CEO/Co-founder of R2Crowd capital, participated on a speaking panel called ‘Hot Vertical: Real Estate Crowdfunding, an Emerging New Asset Class’ moderated by Brooks Barnett, Manager Government Relations and Policy at the Real Estate Property Association of Canada (RealPAC) explained, “We received an overwhelming response for our panel discussion and lunch & learn at CCS2016. We are on the forefront of connecting investors with quality commercial real estate opportunities in Canada.”
Real estate crowdfunding was a $3billion industry in the US last year and is continuing to grow. Canadians are just realizing the potential of this market. In addition to the Syndicated Mortgage exemption, other exemptions such as the Accredited Investor exemption, Offering Memorandum exemption and the Start Up Exemption are used to open the doors for the private capital market in Canada reaching $150B and spanning a scope of 20 million Canadians who are able to qualify for debt or equity investments.
Investors and Real Estate sponsors open access to quality commercial real estate deals
Investors are able to reap a number of benefits by investing through a crowdfunded portal. They are able to gain access to quality commercial real estate offerings that they could not have prior. Investors can strategically choose properties by geographic location, asset class, stabilized or value-add assets and build a personalized portfolio. All of this can be done safely through online avenues like computer, mobile or tablet. Investors get to do full due diligence on the property they want to invest in and hold a direct title to it.
Average returns on such investments are typically in the 10-14% per year range. In today’s volatile stock market it makes a lot of sense to invest in good quality well located commercial real estate which is backed by underlying leases that offer stability of cash flow. Traditionally such investments were only open for wealthy investors as sponsors would ask for large cheques for e.g. in the amounts of $100,000 and up, however, with crowdfunding small investors can also now co-invest alongside wealthy investors and participate on the same terms.
Sponsors are also able to benefit through using a real estate crowdfunded platform as they are able to raise a significant amount of capital a lot faster, and at a lower cost than if they were to use traditional routes of capital raise. They are able to access our growing database of 120,000 investors, while reducing their workload as many intermediary processes associated with the traditional avenue are not costs effective and timely.
If you are interested in learning more about new capital raising and investment opportunities for investors and real estate sponsors, please visit us at R2Crowd.com for more information.
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 1300+ 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 About Us or visit ncfacanada.org.