As housing prices continue their upward climb, the dream of property ownership for so many under 40 is quickly evaporating, if it hasn’t dissolved entirely already. Young couples with good credit and two incomes find it a struggle to gain any kind of foothold in a market where properties with high listing prices still sell for over asking, especially when that market is Toronto.
Crowdfunded real estate is one method to fight back against a market that simply does not allow those on the outside to penetrate. In Toronto, the average price for a home sits at over $1.1 million; the average price for a condo is still high at over $700,000. As prices continue to climb and interest rates slowly tick up with no end in sight, crowdfunded real estate allows those with property-owning aspirations a chance to realize their dreams.
What is Crowfunded real estate?
High down payments make it increasingly difficult to invest in property in Toronto. For those seeking to move from renting to buying, that initial upfront cost is often the biggest and sometimes only hurdle, especially when monthly rental payments are in line with potential mortgage costs.
Crowdfunding real estate seeks to break that down payment wall. For years, crowdfunding has been a means to raise money for important goals such as medical procedures as well as more entertaining desires like creating a board game or producing a TV show. Crowdfunding has entered the real estate market and addy aims to bring people together to gain fractional ownership with a significantly less investment and risk.
addy takes an investment position in a property and then allows individuals to invest for as low as $1. With addy’s trusted experts evaluating properties and conducting due dilgence, there is little work required on behalf of the investor.
Crowdfunding benefits
The main appeal of crowdfunded real estate is the minimum principal investment required. In order to get into the fast-paced and high-priced market in Toronto, individuals or couples can expect to put up at least $60,000 as a downpayment. A minimal down payment of 5% is required for properties under $500,000, but that price is hard to find in Toronto, with small studio or single-bedroom condos offering limited choices. It’s more realistic to find a home that costs between $500,000 and $1 million, which requires that same 5% down payment on the first $500K but an additional 10% on the second $500K.
All of that is to say it’s not cheap to buy a home in Toronto, and that’s before bidding wars drive up prices. addy welcomes investments from $1 up to $1,500, allowing individuals, particularly young persons seeking to earn money over time, a chance to enjoy the monetary benefits of property ownership.
There is pride too that comes with owning property. With addy, the properties are made known to potential investors upfront. Those who are curious may be able to physically visit the property while those with a stake have a chance to show it off as well.
Crowdfunding risks
There are common mistakes to avoid and certainly some risks to crowdfunding, but addy looks to make investing simple. Because addy is investing alongside members, goals are aligned, so that which benefits the company also benefits the investors. addy believes in seeking out win-win scenarios to lift all those who are a part of the process.
addy makes clear ahead of investing what the plan is for each property and what a potential return would look like, dividing risk into four different investment categories. A Core investment is low risk, with quality properties requiring minimal upgrades, while a Core-Plus offers a similarly conservative investment with a bit more work required up front.
A Value-Add investment presents moderate risk; while cash flow is minimal upfront, it has the potential to increase significantly over time with improvements to the property. Lastly, an Opportunistic investment offers high risk paired with high reward. These two types of properties call for investors to be patient and not expect returns for a few years.
addy Crowdfunded Toronto Properties
While we are based in Vancouver with properties in British Columbia and Alberta, our ever-expanding portfolio includes several properties in the Greater Toronto Area as well.
Past investment properties include a 9-building site with 99 units comprising one- and two- bedroom homes. The property is located near Don Mills Rd. and Lawrence Ave. E, a popular, walkable neighborhood that features a mix of family homes, retail shops, schools and restaurants. Public transit is readily available, with a trip to the downtown core taking around 40 minutes, though Don Valley Parkway access is just minutes away.
Avenue Rd. and Lawrence W. is the site of another recently sold-out investment property. 95 units across 19 buildings offered a promising opportunity in the busy North York hub.
A property in the lively Eglinton West neighbourhood was recently opened up to members. Clearview on the Park is a 115-fifteen unit apartment complex in a walkable neighborhood just minutes away from Coronation Park and Keelesdale Park, part of the Black Creek Watershed. Stores and restaurants big and small populate Eglinton W., and as Keelesdale Station will be a part of the much-anticipated Crosstown LRT, it will be more convenient than ever at getting across midtown.
