Meet the Uber of real estate investing
Although commercial real estate has allowed countless Canadians to capitalize upon lucrative investment opportunities, its high barrier to entry has traditionally precluded many demographics from accessing the market.
This is why two industry veterans have set out to “democratize” the practice by developing R2 Crowd, a technological platform backed by Fortune 500 real estate services firm Jones Lang LaSalle (JLL).
This solution aims to provide property direct investments to a more expansive portion of the North American marketplace.
“The way we work is we continue to arrange senior debt to JLL, who is our strategic business partner,” said R2Crowd co-founder Amar Nijjar. “Any client who’s looking to raise capital on their project beyond a first mortgage can come to us on the R2 Crowd platform and we’ll put all their deals on it, push them as investments, and offer returns from 5% to 20%.”
Launched about a month ago, its existing targets primarily consist of doctors, lawyers and business executives, typically between the ages of 30 and 45. Nijjar hopes that will soon broaden as the idea becomes more mainstream, however.
“The majority of the money is going to come from high net worth investors,” Nijaar said. “That’s where wealth resides, but with that being said, our goal is to democratize access to people like you and me.”
He foresees that investors will soon be able to be able to commit a minimum of $2,500 while still benefiting from 10%, 12% and 14% returns.
Real estate crowdfunding has already burgeoned to a $3 billion industry in the U.S., a number that’s projected to rise to $6 billion in 2016. R2Crowd is not only among the first of such portals in Canada, but it strives to stand apart from competitors.
“We are one of the first ones, there are a few others that are very small, but they’re not real estate professionals like we are,” he said. “They’re also affiliated with existing property owners, so there’s a bit of a conflict of interest there, whereas we are complete intermediaries. We don’t own property, we might invest to have some skin in the game and gain more credibility, but we always remains at arms’ length from any sponsor.”
In fact, all project sponsors are vetted through a rigorous background check and credibility analysis to ensure that investments remain secure.
While it’s hard to envision where R2Crowd will be in the next five to 10 years, Nijjar expects that its impact on the market will be long-lasting.
“What real estate is to the taxicab industry, what Airbnb is to the hotel industry and what Google is to the Yellow Pages, that’s what R2Crowd is to the real estate capital raised business,” he said.