CUSTOM SOLUTIONS
RESIDENTIAL & COMMERCIAL
LENDING
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CMB MAGAZINE cmba-achc.ca winter 2016 | 35
crowdfunding
2 TENANTS: ere are multiple tenants in multiple businesses that
are providing cash flow to the property income statement and limited
partnership vehicle based on long-term contractual obligations, thereby
providing stability of cash flow.
3 EASY: Commercial property is easy to understand for an average
investor. Tenants pay predictable rents, which form part of the gross
income and the landlord pays predictable expenses resulting in a
relatively stable bottom-line net income that is then available for
distribution.
4 MANAGEMENT: Crowdfunding portals promote transparency. An
average investor takes comfort in the fact that the owner/sponsor of a
project will oentimes have more than 50 per cent of the equity into the
project (a.k.a. "skin in the game"). Prudent managers will then make
sure that the property is well managed.
5 SCARCITY: Economics 101 – Invest where there is lesser supply and
more demand. We have only so much well-located land. Investments in
such projects will hence always appreciate over time.
Nothing is different in how investments are made via crowdfunding
vs. the traditional way of investing in commercial property – and
yet everything is different. For example, underlying legal structures,
securities exemptions, risk assessment, due diligence, property returns,
etc. are fundamentally the same as they ever were; however, the scale
of such investments now is totally different. ink about real estate
crowdfunding as what Uber and Airbnb have done to the taxi and hotel
industries. ese companies are acting as switchboards of information,
but their underlying business is still the same, whether it's moving
people from point A to B or giving them a bed to sleep on!
Investors are encouraged to put small pieces of their investment
portfolio into multiple properties via crowdfunding portals so as to
generate a well-balanced risk-return profile.
Infographic:
Supplied
