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.
"This is a good opportunity for those who do not have the time, knowledge or large amounts of capital required for other real estate investments," says Tim McKillican, president of Open Avenue.
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.
The group requires approval from the Ontario Securities Commission for the offering, with McKillican expecting this to happen by the end of the year.
"The set-up is similar to a limited partnership with all investors having a share in a legal entity," he tells CREW.
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.
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