real estate crowdfunding workshop - crowdfundsuite
TRANSCRIPT
Presented on 4/16/16 by
CROWDFUNDING WORKSHOP
GVHBA REAL ESTATE
Bret ConkinChief Evangelist
Ever used….....
The Good & Bad?
Source: Vision Critical
WHAT ARE WE SHARING?
Source: Vision Critical
TRENDS – BROKERED INDUSTRIES
OBJECTIVE
Learn how RE crowdfunding may fit
into your financing or business
plans
OVERVIEW
• WHAT IT IS
• WHY IT’S GROWING
• ILLUSTRATIONS
• BENEFITS/LIMITATIONS
• EVALUATION
• DEAL STRUCTURE
• PLATFORMS
• FOREIGN INVESTMENT
• FREE CHECKLIST AT
Crowdfundsuite.com
HOW CROWDFUNDING MODELS DIFFER
DonationsHelp those in
need expecting
nothing in return
RewardsPre-orders or
perks for backing
a project
EquityShares or
securities in
companies
LendingLoans via
the Crowd
not banks
GLOBAL CROWDFUNDING
New Canadian
Crowdfunding
Laws (2015)
&
JOBS ACT (US)
THE PROBLEMS
• Lack of capital for
projects
• Lack of
community
support
• Failure to grow
investor pipeline
REAL ESTATE CROWDFUNDING
- New Crowdfunding
Exemptions (CAN/US)
- Liberalized Securities
Regulations
Transforming investing from offline to online
RE CROWDFUNDING STATS
250+ PlatformsCrowdfunding
residential &
commercial projects
$100 - $100kInvestment size from
investors
Est. $2.6 BillionInvested in 2015
$100k - $25 MillionCrowdfunded project
size
WHO ARE THE PLAYERS?
Real Estate Focus Est. Returns Min. Investment
Commercial 5 – 20% $1,500
Commercial 15 – 25% $10,000
Commercial 7 – 12% + Perks $100
Cash-flowing
Commercial &
Residential
8 – 17% $5,000
Commercial &
Residential8 – 20% $5,000
POWER OF ONLINE CROWDFUNDING
• 80,000 members
• $3B in real estate investments
• 90,000 monthly visitors to website
• $130M raised for 1600 properties
• Raising $650,000 on SeedUps Canada
• 62% funded by accredited investors
RISE OF RE CROWDFUNDING
2015 GrowthIn real estate
crowdfunding
market
156%
VC Raised by
Platformsto further grow their
marketplace
business
$120M
Investment
by RenReninto Fundrise in
2014
$31M
EQUITY VS. LENDING
EQUITYEquity stakes
in property or SPV.
Rental income and/or
Asset appreciation.
DEBT PROS5-10+% returns.
Lower Risk.
Shorter holding periods =
More liquidity.
Lower on capital stack.
EQUITY PROSHigher returns!
15-25% (net)
DEBTInvesting in mortgage/
loan of property.
Interest payments.
ILLUSTRATION A – HARD ROCK HOTEL PALM SPRINGS
• Kittridge Hotels & Resorts/Realty Mogul
• July 2014
• $1.5M raised to refinance/renovate
• 85 investors received VIP benefits
• Customers became owners
• Created evangelists to promote hotel
ILLUSTRATION B – BC BACATA TOWER
• Mixed use project in
Bogota, Columbia
• $175M raised from 3500
investors
ILLUSTRATION C – AJAX LAND MORTGAGE
• Real Estate Development
• Bridge Financing -Residential condo project (Phase I)
• Mortgage Debt Investment
• Partner: Downing Street
• Total Debt Raised: $15.5M
• Crowdfunding: $500k
• Closing date: 4/22/16
ILLUSTRATION D: PATCH OF LAND/ GOLDEN BEE PROPERTIES
West LA Fix & Flip
• $1M borrowed
• 44 investors
• $750k reno planned
• 12% interest paid
• Golden Bee profit =
$575k*
Patch of Land
• $61M in Loans (2015)
PeerStreet
• $40M in Loans (2015)How Crowdfunding has made Flipping Houses a lot easier – LA Times Feb ‘16
ONLINE VS OFFLINE
OFFLINE
ONLINE
Investor Exposure Transaction Cycle
180,000+
400 180 DAYS
60 Days
INVESTMENT SIZE | SPEED
Min. Investment of A$340,00028 Asian investors ‘presold’ into investment
Min. Investment of US$100,000*Successfully funded $150M+ Manhattan real estate
400% Oversubscribed in 4hrsFundrise eREIT invests in commercial real estate,
distributing cash to investors every quarter
* International investors
CHINESE INVESTMENT CLIMATE
$525
Million
$33 Billion
Diversify
Cheap
Canadian
Dollar
“Mainland Chinese buyer’s market”Study says 70% of YVR West Side homes sold
to Mainland Chinese buyers (The Province)
Invested in Canadian Real EstateBetween 2008 to 2014, $33 billion invested
into residential and commercial
Diversifying Real Estate InvestmentsNot only investing into residential, but hotels,
resorts, wineries, farms, etc.
Canadian Investments on DiscountDrop in value of Canadian dollar attracts
Chinese investments
CHINESE CROWDFUNDING
Personal Savings
AccountsHengXinLi launched to
give investors access to
international real estate
investments
$21
Trillion
Chinese Real Estate
Platforms In USChinese only platforms
for Chinese investors to
invest into US real
estate
iCross
Ydizhu
P2P Lending
Fraud in ChinaLack of credibility in
Chinese platforms
$7.6
Billion
BENEFITS FOR INVESTORS
DiversificationLower investment
requirements allow
diversification
AccessibilityParticipate in deals
that were inaccessible
before
Speed/FlexibilityOnline tools,
algorithms & analytics
reduce friction
Higher ReturnsNew asset classes
provide higher returns
via crowdfunding
TransparencyImmediate availability
of information through
the platform
Lead InvestorsSyndications/ Invest
along with industry
experts
WHY NOT JUST INVEST IN A REIT?
• Ability to select
specific
geography, sector
& properties
• Not subject to stock
market’s volatility
• Fees may be lower
Cut Out
the
Middle
Men
Marketing
Benefits
Extend Your
Investor Reach
Online
BENEFITS FOR DEVELOPERS/BUILDERS
Lower costs vs.
traditional
funding
$
€¥
£
Big Data
Analytics
24/7
Accessibility
CROWDFUNDING STRUCTURE
Online
Investors
% Stake
Project Owners
Majority
ownership
Special Purpose Vehicle
Land Investment
CROWDFUNDING TEAM/ROLES
PlatformDue Diligence
Distribution
Reporting
Project OwnersBuilder/Developer
Offering/Property/Fund
Service ProvidersLegal / Strategy / PR
Campaign Management
DEAL STRUCTURING
Accredited Investors
Special Purpose Vehicle
Prospectus ExemptionsNo splitting fees, but can not operate as
business offering securities
Small Retail Investors
Exempt Market Dealers3-5% fee for dealers processing
investors, possible partners: Frontfundr,
Waverley
COST/BENEFIT
Loan Origination
Fees
Property
Listing Fees
Investment Management
Fees
Transaction or
Services Fees
$
Investor
Pipeline
Land
Appreciation
LIMITATIONS
Consider
Investment
Fundamentals
Choose right
platform
Consider Liquidity
Don’t forget about
Risk
$
May require
other funding
sources
Requires
platform
approval
For Investors
Early days
Requires
platform
approval
For Project Owners
WHO WE WORK WITH
About Us
o Experience – Built/operated multiple SaaS platforms
o Media – Globe & Mail, Vancouver Sun, CTV, Global
o Speaking - Canadian Crowdfunding Summit, Nail the
Numbers (SK), Canadian Resort Conference 2015
o Blogger – Investopedia, ITBusiness, Crowdfund Insider
o Ambassador - National Crowdfunding Assn of Canada
Bret Conkin on The Exchange with
Amanda Lang – CBC News
Help clients Profit
from the new
Crowd Economy
Services
o Platform Development
o Strategy
o Capital Raising
o Project Management
o Systems Integration
o Operations
o Marketing/PR
o Business Development
WHAT WE DO
Thank you!
CONTACT:
Bret ConkinChief Evangelist
778.323.7297
Crowdfundsuite.com
@bretconkin
@crowdfundsuite