Property prices are high and the banks can be tough to deal with when you want to finance your next great real estate venture. Which is why a new trend that has just spread from across the border may be a welcome addition to property investors’ options
We’ve all heard about kickstarter or one of the many other platforms that allow people to invest in a new product. Frying pan shaped like a sword? Sure – here’s $46,000. Hover board? Why not? And this week we’ve seen the first crowdfunded real estate development in Canada.
NexusCrowd Inc has just released details on what it claims is the country’s first commercial real estate project funded via online investment. The property in question is a 238,000 square foot retail mall in Mississauga, close to Costco and Walmart's giant stores. The crowdsourcing fund raised $500,000 from accredited investors towards a $100M project to be based on the corner of Dixie and Dundas.
The man behind the project, Hitesh Rathod came up with the idea while he was trying to get funding for a farm project. "I quickly realized how difficult it is to raise capital from the equity-raising side and as an investor to get access to really good deals,” he told Real Estate News Exchange. “I started looking into the crowdfunding space and thought it was a great evolution for alternative financing.”
The project allowed investors to get in on the action with a minimum stake of $10,000. Typically real estate ventures might require at least $100,000 from accredited investors. NexusCrowd structured a limited partnership for crowdfunding investors – that partnership then invested in the mall.
And how much will investors hope to make? “I can’t go into the respective returns, but what I will say is every deal that we target in the real estate space should provide, or the expectation is they will provide, anywhere between 15 and 25% IRRs,” Rathod told renx.ca.
As with any investment – check with your financial advisor first. Or maybe see if you can crowdfund YOUR next real estate investment project!
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