Check out the InvestaCrowd FAQ!
What is InvestaCrowd?
InvestaCrowd is an online real estate marketplace that connects the capital of our members to reputable real estate companies seeking funding. We simplify the real estate investment process by offering our members a diversified portfolio of quality, pre-screened, private real estate investment opportunities, and allowing our members the opportunity to invest alongside real estate experts.
Members have access to invest across the entire capital stack of a project including common equity, preferred equity, senior debt and mezzanine/junior debt.
Members can, after becoming accredited/qualified investors*, browse opportunities based on their risk/reward appetite, review documentation and comparable research, and conduct the necessary due diligence so that they can make an informed decision before making an investment. Investors will have a unique dashboard to record and review all the projects they are following and have invested into. They can also manage and monitor all the reports and updates about their projects, including earnings to date, all through a convenient and secure website.
* In the U.S., only accredited investors are allowed to invest with us, which means you must have an annual income per individual of over $200,000 USD per year (joint income over $300,000 USD per couple) in each of the 2 most recent years, OR an individual or joint net worth of more than $1 million USD, excluding the value of your primary residence.
In Singapore, only accredited investors with an annual income per individual of not less than $300,000 SGD (or its equivalent in a foreign currency) in the preceding 12 months OR whose net personal assets exceed $2 million SGD (or its equivalent in a foreign currency), AND qualified investors who have completed the "Known Your Customer" application, are allowed to use the InvestaCrowd platform.
For all other countries, the rules vary. It is ultimately up to the real estate companies to decide whether to accept foreign investors.
How do I become a member?
After completing an online application, investors will be provided access to the InvestaCrowd platform. However, before a registered member can start investing, the member will be prompted to fill out the requisite information and forms depending on the member's country of citizenship.
The member will not be able to view active offerings and will only be able to see past deals until the member has completed the accreditation process. Once the verification and/or accreditation process has been completed, the member can then browse through investment opportunities, review and research real estate companies and their projects, review and sign the necessary documents to start the investment process.
What types of projects are available to invest in on InvestaCrowd?
We offer both real estate debt and equity opportunities across commercial, retail, mixed-use, residential, industrial and land projects. In addition to direct investments, we will also be featuring other structured investment vehicles offered by professional real estate companies. Whether it's cash-flow producing properties or acquisition and disposition of real estate development projects, InvestaCrowd offers attractive opportunities with real estate companies who are experts at what they do. Real estate companies on the InvestaCrowd platform include developers, sponsors, operating partners who are industry experts with proven successful track records.
Is it different from other real estate portals?
Yes it is. InvestaCrowd is not a real estate listing portal and does not offer finished apartments and houses for sale. Our members can access real estate investments and co-invest alongside developers with proven track records at the beginning of the project where returns are generally the highest. You can now be an investor in the development of real estate, and not just buy the end product where much of the profit has already been made. Typically the minimum total investment size for a project is $25Mil USD and above, however investors can access these projects with a minimum of $100,000 USD.
What are the benefits of joining InvestaCrowd?
- Customised - Tell us your target market, type of project, location and size of investment, we will only work for you on real estate projects that meet your customised criteria.
- Access & Intelligence - Via your appointed relationship manager you'll get the first look at deals before they are presented to the broader member base. On a quarterly basis the team will prepare a market intelligence report only accessible by you. InvestaCrowd is investing heavily into data analytics and metrics for investors to assess different investment projects.
- Priority & Privilege - One on one direct access to our partners, developers and sponsors. We will make time available to premier members to ask the tough questions or just to get a better insight with our partners whether in person or via phone. There will also be exclusive access to premier investor only events.
- Diversify your investment portfolio - Like never before, you can spread investment across several projects, geographies and types of real estate and there is no need to get a bank loan and deal with all the hassles of managing your own property.
- Massive reduction in the typical time, cost and inefficiency of real estate investing - InvestaCrowd makes it easy for investors to access a variety of real estate investments across a number of geographic markets, and with a relatively small amount of capital. By providing direct access to institutional quality investment opportunities with professional real estate companies, we believe that InvestaCrowd investors will gain unprecedented access to a pool of opportunities that was previously only available to an elite few.
How does a project get listed on InvestaCrowd?
Through our personal and long established contacts, we work with real estate companies with opportunities that meet our investors' requirements. Real estate companies can also contact the team at InvestaCrowd with information about their project, which must pass stringent criteria, including a lengthy proven track record, an experienced management team, and project suitability, before it is considered for further in-depth due diligence. Experienced real estate finance, development and legal professionals then evaluate each project thoroughly before it is listed on InvestaCrowd.
Why haven't I heard about this before?
The world of finance, banking and investment is rapidly changing. InvestaCrowd uses the power of the internet and its members to fund real estate projects. It has become a familiar concept in Europe and the United States, and we are now giving our members the opportunity to be involved.
Why should I consider investing through InvestaCrowd?
Allocating some portion of your portfolio to institutional quality real estate may provide you with a reasonably predictable and stable level of income; the opportunity for capital appreciation; and diversification of your portfolio. With real estate, there is potential for collateral, cash flow and capital appreciation. With InvestaCrowd, investors can pool capital together to invest alongside reputable real estate companies rather than owning the entire property themselves. The main benefit investing through InvestaCrowd is co-investing with real estate experts and getting better terms on your money. There is also a huge benefit in not having to deal with the hassles of tenants, rent collection and maintenance, or any of the day-to-day management of the property or its development. It is also much more efficient to assess deals on InvestaCrowd, versus spending time and money searching for deals on your own, especially if the deal is not in your home country. Our members invest alongside a professional real estate company, which has the proven expertise to develop and manage the project successfully. With our platform, members are able to invest in a variety of projects in different geographic markets to both target and diversify their investment opportunities.
What will I actually own?
The interest owned will depend on the type of project (whether it's debt or equity), and differ from country to country (depending on local regulations). A typical structure will involve the developer forming a single purpose entity ("SPE") for each investment opportunity, and that SPE will in turn make a loan on a real estate property (in the case of a debt investment) or hold equity interest in a real estate property. As an InvestaCrowd investor, you will own direct shares in the SPE formed for that specific project. Please note InvestaCrowd does not handle or manage any funds.
What's the difference between an equity vs. debt investment?
Most real estate deals include both debt and equity capital. In terms of priority of payment, debt gets paid before equity.
As a debt investor, you are a lender to the property owner/sponsor and receive fixed returns based on the interest of the loan and the size of your investment. The debt is usually secured against the property and because of its "senior" position and collateralization, debt positions are generally considered less risky than equity.
As an equity investor, you are considered an owner of the property and as the project generates profits, the equity investor will receive a share of the net profits after expenses (including payment of any debt). Payback of an equity investment is not secured against the property; you own the residual value after payment of the debt and bear the risk of loss. However, the equity investors benefit from higher returns as they are uncapped, which means that if the investment performs better than expected, returns can be much higher than those projected.
Are these investments risky?
All investments are asset backed with the property itself, so relative to nearly every other form of investment product available, we believe they are very low-risk investments. Investment returns are not guaranteed and investors should be able to bear the loss of their entire investment. There are risks inherent with each investment including economic downturns, fluctuations in the global and local markets, and changes to the legal landscape which may impact your investment. However, before placing any investment opportunity on our platform, the InvestaCrowd team reviews all aspects of the proposed deal to ensure quality and to prevent fraud. While we recognize that every investment involves risk, and there is always the risk of losing your capital, we strive to reduce that risk by providing you the transparency and tools you need to make an informed decision.
How is investing through InvestaCrowd different than a Real Estate Investment Trust (REIT)?
A REIT is basically an entity that raises capital from investors in order to seek out, acquire and hold a portfolio of real estate investments (often limited by asset class or geography). With a REIT, an investor typically has no say in what assets are acquired and investors are basically handing money over and relying on someone else to select profitable assets. REITs also often charge hefty management fees, which may not be fully transparent. As an InvestaCrowd member, you have full discretion to decide which projects to invest into, as each project is a standalone offering, and how much to invest based on your risk tolerance, financial situation, and investment goals. All of the relevant information relating to a specific project will be available to InvestaCrowd members in order for our members to make an informed decision.
Another major difference between REITs and InvestaCrowd investments is in the tax treatment. REITs are entities which would be taxed as corporations (and thus income to investors would be subject to double tax or entity level tax). Assuming the statutory REIT requirements (including the required 90% distribution rule) are met, REIT investors will generally (subject to certain exceptions) receive the income from the REIT's investments free of entity level tax, but the income is taxable as "ordinary" income to the investor subjecting it to potentially higher tax rates, and in the U.S., the IRS classifies this income as "portfolio" income meaning it can only be offset by losses from other "passive activities" of the investor.
Our members, on the other hand, can take advantage of certain "pass through" tax structures to avoid double taxation. These pass through entities not only avoid any double tax issue but they also allow for the pass through of tax losses/tax incentives of the entity to the individual investors. In terms of real estate, this can be a significant advantage as depreciation and interest expense at the entity level can be passed through to the individual investors. These sizable tax losses/deductions can be used by investors to offset income received from the real estate project (or other similar gains) thus reducing the investors overall tax liability.
How are the returns estimated for each project?
The real estate company listing the project determines the returns.
Is there an investment minimum and maximum?
Yes. The minimum and maximum investment by an investor is different for each project and is set by the real estate company. It could be as low as $100,000.
When will I get my investment back?
Each investment opportunity will have its own "hold period" as determined by the real estate company. Projected returns and distributions, as well as a timetable for milestones and a distribution schedule, will be specific to each listing and, when available, will be noted in the offering documents for that investment. Please note that the "hold period" is an estimate and may differ from the actual hold period for the investment
Am I allowed to sell my investments?
No. Real estate investments of the type you find on InvestaCrowd are private transactions and are not traded on public stock exchanges and cannot be easily sold or traded. Prior to investing, you should consider the likelihood that you will be holding this investment for an extended period of time.
Every investment will have a different anticipated holding period, which could range from a few months to several years. In most cases, the documents that you receive prior to investing will include the real estate company's estimate of the holding period and any restrictions on transferring or selling your investment interest.