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Investors invited to join the crowd

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Guest | 21 Jan 2014, 06:38 AM Agree 0

A Kitchener-Waterloo based company is planning to use the popular crowdfunding model to raise cash for real estate projects, a move that could inspire young entrepreneurs get into the market.
Open Avenue, founded by the partners of Revel Development Corporation, says that unlike large-scale REIT and investment funds, investors can choose which real estate projects to fund. They say this project is attractive for those who want to become involved in real estate but do not have the knowledge or time to do it themselves.
While still awaiting approval from the Ontario Securities Commission, Open Avenue is looking at a $500 to $1,000 minimum investment with a cap of $2,500. Those who qualify under the accredited investor exemption of the securities act – meaning they earn more than $200,000 or have $1 million in investments - could invest more.
Open Avenue is estimating that investors could yield a 12 to 18 per cent return on a development project, and eight per cent on properties that are already removed and leased.
The company plans to initially only crowdfund Revel Development projects. The four-year old company has more than 1,000 apartment units.
  • Mike Davidson | 22 Jan 2014, 07:47 AM Agree 0
    Good idea. Real estate is a good investment in Ontario and across Canada.
  • HAFIZ HASSAN | 22 Jan 2014, 04:01 PM Agree 0
    Very good idea
  • Bosco | 22 Jan 2014, 04:53 PM Agree 0
    Who carries the mortgage book liability if / when the project fails ?
  • Bosco | 22 Jan 2014, 04:54 PM Agree 0
    Who carries the mortgage book liability if / when the project fails ?
  • Mary Koenig | 22 Jan 2014, 06:37 PM Agree 0
    Why would someone want to invest in your project ?
    Sounds good but when something sounds great it says disaster To .Small amount of money ? 8%/10 % lets rethink this on paper every thing sounds good .
  • Jan | 22 Jan 2014, 07:51 PM Agree 0
    these deals are coming up more frequent. You can also buy into fortress capital who give an 8% return on your money but you must wait until the project is complete.....Lots of fine print to read
  • Tim McKillican | 23 Jan 2014, 12:37 AM Agree 0
    Thanks for the kind comments.

    To answer your question Bosco - all investors/crowdfunders would become unitholders in a Limited Partnership legal entity that owns the property. The mortgage/first mortgage would be secured against the property. If for some reason the building was sold and the sale price does not cover the debt remaining then the remaining equity money would cover it.

    In an LP structure the unitholders maximum liability is the value of the capital they've invested. So they would not be liable for anything beyond what they've invested.

    Tim McKillican
    President, Open Avenue
  • wil | 23 Jan 2014, 02:04 PM Agree 0
    it is possible that your real estate investment COULD go down in value.
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