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Fintech and real estate


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#1 Victoria Watcher

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Posted 19 January 2022 - 03:00 AM

The Future Of Real Estate: Fintech 50 2021The Futufddfdfre Of Real Estate: Fintech 50 2021

 

 

From the abyss of an economy-stopping global pandemic, the U.S. real estate market has emerged as arguably the hottest market in the world. Low interest rates and a future of working from home, or at least more flexible office arrangements, caused many Americans to relocate to suburban areas with lower costs and a higher quality of life. The pandemic-driven shifts ignited a residential housing boom and novel financial technology played a huge role in the surging market. 

 

https://www.forbes.c...sh=4b4d100e2c31

 

 

 

 

HERE is the local angle this week:

 

 

 

A new investment opportunity debuted in Sooke this month, and while it sold out within weeks, the comments from some locals forecasted negative returns.

 

The company is Addy, and it positions itself as barrier-free real estate investing, allowing regular folks to invest small amounts in residential and commercial real estate. It recently bought a slice of a small 1960s apartment building at 2068 Townsend Rd. in Sooke, with 947 investors averaging $345 each.

 

“We're essentially enabling regular Canadians to take the place of generally one wealthy individual who would cut a half a million or a million-dollar cheque and be the investor in these types of properties. What we're doing is essentially breaking that down so everybody can invest the way a wealthy individual can invest,” Addy co-founder Steven Jagger told the Capital Daily podcast. 

 

Real estate crowd investment comes to the CRD

 

Investors can chip in as little as $1 to be part of a house purchase in Sooke.

 

But what will it mean for superheated local real estate markets

 

 

 

?


Edited by Victoria Watcher, 19 January 2022 - 03:02 AM.


#2 Victoria Watcher

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Posted 19 January 2022 - 03:05 AM

I did a tiny bit of research on the Addy website.  It's very scarce on details, but once you buy, you cannot remove your investment until the end of some pre-determined period.

 

And presumably, Addy will decide who manages these properties (or will manage them themselves) and how much they charge for those management fees.

 

HERE:

 

https://www.addyinvest.com/clearview/

 

is one particular active project that is aiming for a 106% ROI with cash returns at re-fi in 3 years and exit (sale) at 7 years.  You can read the offering memorandum there.


Edited by Victoria Watcher, 19 January 2022 - 03:14 AM.


#3 spanky123

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Posted 19 January 2022 - 08:02 AM

^ A fool and his/her money are soon departed.



#4 Mike K.

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Posted 19 January 2022 - 08:20 AM

I don’t think Addy has any say in who manages what. The building owner just opens up some equity for Addy to buy with their crowd sourced funds. This isn’t the first local project on Addy, they’ve helped crowd source developments here in the past.

This is quite poignant from the Forbes article:

…caused many Americans to relocate to suburban areas with lower costs and a higher quality of life.


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#5 Victoria Watcher

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Posted 19 January 2022 - 08:25 AM

Well, Addy decides who they invest with.  So that is 100% control of who manages.



#6 spanky123

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Posted 19 January 2022 - 08:25 AM

^^ Not to mention that socialists have turned many downtown cores into cesspools so it is not a surprise that people want to move elsewhere.



#7 Mike K.

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Posted 19 January 2022 - 08:26 AM

Yes, but who they invest with is not who will necessarily manage the property. The owner of the building still calls the shots.

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#8 Victoria Watcher

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Posted 19 January 2022 - 08:32 AM

Yes, but who they invest with is not who will necessarily manage the property. The owner of the building still calls the shots.

 

Presumably they have hundreds of thousands of properties to chose from.  It looks like they have done a couple dozen deals.  So they effectively choose very carefully who they invest with.  That's probably good.  But you can also bet if they bring $1M into a deal, they get a nice fee.  And it's risky, if the developer had a less risky deal they'd just get the money from a bank.

 

Here is a positive third-party review:

 

https://techcouver.c...tate-with-addy/


Edited by Victoria Watcher, 19 January 2022 - 08:35 AM.


#9 Mike K.

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Posted 19 January 2022 - 08:37 AM

It looks like it might be more-so a pre-investment connection that plays a large role here, as in they know the owner outside of the investment scenario. In this case the owner is acquainted with the Addy operators. Cap is making somewhat of a big deal out of this, also calling the building a “house” but it’s a small apartment building.

But I do think there is merit to this crowdsourcing idea. It allows anyone to enter the market. The cap rate for the Sooke building in this case is solid, the owner is solid, and the potential is solid. It’s a good play.

For the developer it’s not about “risk,” but about dollars and financing. If they can lower their financing obligation at the bank by 30% by having people happily fund a portion of their investment, that’s a win-win. There is no risk-aversion with this Sooke building, as in banks not wanting to lend on it. The developer just saw an opportunity and took it.

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#10 Victoria Watcher

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Posted 19 January 2022 - 08:43 AM

It looks like it might be more-so a pre-investment connection that plays a large role here, as in they know the owner outside of the investment scenario. In this case the owner is acquainted with the Addy operators. Cap is making somewhat of a big deal out of this, also calling the building a “house” but it’s a small apartment building.

But I do think there is merit to this crowdsourcing idea. It allows anyone to enter the market. The cap rate for the Sooke building in this case is solid, the owner is solid, and the potential is solid. It’s a good play.

For the developer it’s not about “risk,” but about dollars and financing. If they can lower their financing obligation at the bank by 30% by having people happily fund a portion of their investment, that’s a win-win. There is no risk-aversion with this Sooke building, as in banks not wanting to lend on it. The developer just saw an opportunity and took it.

 

I'm not opposed to it at all.

 

But it's not really a way for "people to enter the real estate market".  Any more so than me entering the automotive market with my Telsa shares.



#11 Mike K.

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Posted 19 January 2022 - 09:12 AM

I meant from an investment perspective. Lots of deals have partners, and this Addy thing allows anyone to be a partner in a tangible asset play.

You’re right though, Addy doesn’t just partner with any project. There has to be clear up-side. And I can tell you that with this particular building the new owner made a good buy.

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#12 tommy

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Posted 19 January 2022 - 11:19 AM

https://www.frontfundr.com/Campaign

 

these folks have several ways "little" investors can put money into real estate



 



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