Buying any property, whether it’s a single-family home or a massive apartment complex, requires a fair amount of money upfront, plenty of due diligence and sometimes a little bit of luck. With high demand and low supply of residential homes, and a high price tag for commercial real estate, it can be hard to invest in a popular durable, finite and potentially lucrative asset class: property.
However, the rise of crowdfunding breaks down many of the barriers to investing in real estate. Here’s how it works and how we at addy set ourselves apart from other platforms.
What is crowdfunding?
Crowdfunding is simply a mechanism that allows a group of people to pool their money together towards a common goal that would be otherwise difficult to achieve on one’s own. Common examples include raising money for a medical procedure or operation, or, to a less serious extent, raising money to bring back a popular TV series.
In these situations, the targeted financial goal is too steep for one or several individuals. But by allowing many others to join in, even small amounts of money can make a big difference.
Crowdfunding pros and cons
We’ve tackled the pros and cons of crowdfunding more in depth in the past, but it’s worth noting here in brief as these benefits and drawbacks may influence how you get started. Crowdfunding real estate allows you to enter into an investment with low liability and no involvement in the actual management of the property. Just keep in mind that your investment is mostly illiquid, which means it can be difficult or impossible to withdraw your money earlier than the defined term..
Start crowdfunding real estate
Financial goals and boundaries
Before you begin your crowdfunding journey in earnest, it’s important to honestly and accurately identify your financial goals and appetite for risk. Some platforms only allow accredited investors, while others have a high minimum investment amount.
addy strives to make real estate accessible for everyone, which is why our minimum investment is only $1. We also cap the investment towards a single property at $1,500 so as to allow as many people to get involved as possible.
Keep in mind fees and additional charges when inspecting platforms. This will affect how much money you spend and how many you may get in return. There are no fees associated with addy, which means every dollar you invest goes straight to the property.
addy only invests in institutional grade commercial real estate properties that come with lofty price tags. Types of CRE include business parks, hotels and purpose-built rentals. These are properties located in Canada that you can physically visit (and snap a selfie).
addy decidedly stays away from investing in single-family homes and individual condos so as to not compete with the average Canadian family seeking their first or forever home in a tough market.
What happens if a property isn’t fully funded?
Not all crowdfunding platforms are created equal. With some, you might be putting money towards a property without knowing if it will be fully funded and move forward. That’s generally how crowdfunding works with any goal: if enough money isn’t raised, the campaign fails.
That is not the case with addy, however. There is no risk that a property isn’t fully funded as addy works with the General Partner of a project to ensure all the needed money arrives. In some cases the goal is flexible. Other times, addy or an accredited investor will top off the remaining goal after the property has been available for some time. Either way, we’re good for it.
Invest with addy
addy is a unique platform breaking down real estate barriers to make this potentially lucrative asset class available to all. Become a member to start your crowdfunding journey, own a piece of property and earn passive income.