For a long time, the only way to invest in real estate was to physically buy property either by yourself, with a partner or as part of a company. Times have changed, however, and a variety of platforms are offering opportunities in real estate investing online with little work involved.
addy strives to break down the traditional barriers to real estate investment; but so do a lot of other companies now. We’ve gone over them in detail in the past, but it’s worth examining exactly how to compare platforms and the ways in which addy sets itself apart from the pack.
Crowdfunding real estate
addy crowdfunds commercial real estate so the average Canadian has a chance to invest in this asset class. CRE properties come with high price tags and a lot of maintenance and management, but crowdfunding spreads across the financial burden as well as the risk. On top of that, members of crowdfunding platforms aren’t involved in operations of the property; they just invest and hopefully earn some passive income down the road.
As mentioned, addy isn’t the only crowdfunding platform around. NexusCrowd is another option in Canada, while the popular Crowdstreet is based out of the U.S. Two more Canadian companies in Willow and BuyProperly operate similarly with the idea of fractional ownership.
While companies may use different terms to describe their mechanism, essentially all are breaking up the large financial investment required to own property into smaller, more management pieces that can be spread around multiple parties.
One thing to consider with crowdfunding is what happens if the property isn’t fully funded. With addy, there is no risk of that taking place. Every property will be fully funded, and every dollar a member puts towards a property will go to that property.
Investors and investments
While crowdfunding breaks down financial barriers, just how much those barriers are lowered depends in part on who can invest and how much. Some companies only allow accredited investors to have a shot at such properties; that doesn’t help the average investor or anyone who wants to get started on their their financial journey
Even if a platform is available to both accredited and non-accredited, it’s worth looking at the minimum investment. BuyProperly, for example, has a minimum investment of $2,500, which may be helpful for some, but doesn’t allow for just anyone to take part.
addy’s minimum investment is $1. On top of that, a member’s maximum investment towards a single property is capped at $1,500 in order to allow for as many people as possible to take part.
It’s important to consider what type of properties are available – and where. addy operates in Canada, offering up property investment opportunities that are known to members. We highlight not only the property itself but the neighborhood and city, including history and heritage as well as potential social impacts of developments.
addy is notably not a REIT. Such companies manage a portfolio of real estate investments, but those invested in a REIT won’t necessarily know where specifically their money is going. For some addy members, knowing the actual location of an investment and being able to physically patronize it or visit it is something special.
Most crowdfunding platforms deal with commercial real estate opportunities. These are investments that traditionally come with very high price tags, which means they are often inaccessible to the average investor.
addy focuses on institutional grade commercial real estate, which may include office parks, mixed-use buildings, apartment complexes or even hotels. addy does not invest in single-family homes or individual condos, but some platforms may.
This means that it’s possible a crowdfunding company is competing with a couple or family who is trying to buy their first home. With a red-hot market that shows no signs of relenting, and an increasing number of people finding themselves shut out of their forever homes, companies that invest in such residential properties are not helping out the average Canadian, and may even be hurting them.
Costs and fees
The last thing to consider is how much money comes out of your pocket to take part in these platforms. With addy, only members can invest in properties on the platform. A Charter Membership costs $25 for one year, and comes with a money-back guarantee. Membership grants members access to properties, an offering memorandum, as well as some fun perks including event invitations and Discord access.
With addy, there are no additional fees. For other platforms, however, fees may vary depending on the investment opportunities, which means a little more work will be involved when deciding if to invest, and how much.
Invest with addy
Making real estate accessible to everyone means truly and completely breaking down the barriers that prevent entering the market. With a low minimum investment, guarantee the property will be fully funded and properties that are identified ahead of time, addy offers members a unique crowdfunding platform.