For the past few years, I’ve been hearing about crowdfunding for real estate (not to mention other crowdfunded opportunities in various sectors like gaming). Until fairly recently, this was like most initial things, an American thing. But with Addy, it’s been possible for Canadians to invest as much as $1 for a stake in real estate (for now) in British Columbia, Alberta, and Ontario. (My referral link at Addy – For everyone who signs up via my link, Addy will put $25 in my Addy wallet and $25 in yours).
Beyond being a Dividend Daddy, I also own real estate – my home, investment property and various REITs. I have to say, whenever I get the occasional call from my tenant about something needing to be fixed, it makes me think about how much less of a hassle it is to own REITS and now, crowdfunded real estate.
With that said, I’ve only started to dabble in it, with a small investment in a commercial/residential unit on Granville Street in downtown Vancouver (see image below). There is something enticing about being able to say I own a stake in various real estate projects in various cities, something that is hard to do with REITs.
From what I can tell, the Addy platform kicks the butt of traditional private real estate investment firms. Not only do you not have to deal with email, phone calls, and wiring money, the Addy platform makes investing a breeze. I think Addy type platforms will appeal to Millennial and Gen Z investors, particularly as they age. I think these legacy private real estate investing firms will have to adjust or increasingly have their lunch eaten by these start-ups in years to come.
Right now, Addy just initiated a membership model of $25 annually to access their property listings. Before this was recently implemented, investors had open access to their property listings for investing. However, they only had a few properties for investment, as many as two from my observation at any one time. I’m thinking Addy needs to increase the number of available units, including the diversity of their offerings which has skewed towards residential to date.
Admittedly, at $25 it is steep considering I’ve only invested a few hundred dollars to date (I had an interest in trying out their platform when their was a zero membership fee required). If you’re not an accredited investor on the platform, you’re limited to $1,500 stakes in each property. Addy will make some properties exclusively available to members, presumably the bulk of properties, and will probably continue to make a property or two available to non-members as a way to entice them into paying to be a member.
The Globe and Mail published a piece on Addy last week entitled, “Crowdfunded real estate is growing, but remember to research before investing: experts”. It’s behind a paywall but for those with access, you can find it here.
The article suggests investors research the terms of any investment as they often prohibit investment withdrawals so bottom line, invest with money you won’t be needing in the short-term. The article also suggests to pay attention to the listing management because projects will be dependent on them. Addy noted in the article that there are “no fees on transactions, acquisitions or withdrawals because the goal of the platform is accessibility”.
Have you invested in crowdfunded real estate?