Real Estate Crowdfunding Workshop - CrowdfundSuite

Presented on 4/16/16 by

CROWDFUNDING WORKSHOP

GVHBA REAL ESTATE

Bret ConkinChief Evangelist

Ever used….....

The Good & Bad?

Source: Vision Critical

WHAT ARE WE SHARING?

Source: Vision Critical

TRENDS – BROKERED INDUSTRIES

OBJECTIVE

Learn how RE crowdfunding may fit

into your financing or business

plans

OVERVIEW

• WHAT IT IS

• WHY IT’S GROWING

• ILLUSTRATIONS

• BENEFITS/LIMITATIONS

• EVALUATION

• DEAL STRUCTURE

• PLATFORMS

• FOREIGN INVESTMENT

• FREE CHECKLIST AT

Crowdfundsuite.com

HOW CROWDFUNDING MODELS DIFFER

DonationsHelp those in

need expecting

nothing in return

RewardsPre-orders or

perks for backing

a project

EquityShares or

securities in

companies

LendingLoans via

the Crowd

not banks

GLOBAL CROWDFUNDING

New Canadian

Crowdfunding

Laws (2015)

&

JOBS ACT (US)

THE PROBLEMS

• Lack of capital for

projects

• Lack of

community

support

• Failure to grow

investor pipeline

REAL ESTATE CROWDFUNDING

- New Crowdfunding

Exemptions (CAN/US)

- Liberalized Securities

Regulations

Transforming investing from offline to online

RE CROWDFUNDING STATS

250+ PlatformsCrowdfunding

residential &

commercial projects

$100 - $100kInvestment size from

investors

Est. $2.6 BillionInvested in 2015

$100k - $25 MillionCrowdfunded project

size

WHO ARE THE PLAYERS?

Real Estate Focus Est. Returns Min. Investment

Commercial 5 – 20% $1,500

Commercial 15 – 25% $10,000

Commercial 7 – 12% + Perks $100

Cash-flowing

Commercial &

Residential

8 – 17% $5,000

Commercial &

Residential8 – 20% $5,000

POWER OF ONLINE CROWDFUNDING

• 80,000 members

• $3B in real estate investments

• 90,000 monthly visitors to website

• $130M raised for 1600 properties

• Raising $650,000 on SeedUps Canada

• 62% funded by accredited investors

RISE OF RE CROWDFUNDING

2015 GrowthIn real estate

crowdfunding

market

156%

VC Raised by

Platformsto further grow their

marketplace

business

$120M

Investment

by RenReninto Fundrise in

2014

$31M

EQUITY VS. LENDING

EQUITYEquity stakes

in property or SPV.

Rental income and/or

Asset appreciation.

DEBT PROS5-10+% returns.

Lower Risk.

Shorter holding periods =

More liquidity.

Lower on capital stack.

EQUITY PROSHigher returns!

15-25% (net)

DEBTInvesting in mortgage/

loan of property.

Interest payments.

ILLUSTRATION A – HARD ROCK HOTEL PALM SPRINGS

• Kittridge Hotels & Resorts/Realty Mogul

• July 2014

• $1.5M raised to refinance/renovate

• 85 investors received VIP benefits

• Customers became owners

• Created evangelists to promote hotel

ILLUSTRATION B – BC BACATA TOWER

• Mixed use project in

Bogota, Columbia

• $175M raised from 3500

investors

ILLUSTRATION C – AJAX LAND MORTGAGE

• Real Estate Development

• Bridge Financing -Residential condo project (Phase I)

• Mortgage Debt Investment

• Partner: Downing Street

• Total Debt Raised: $15.5M

• Crowdfunding: $500k

• Closing date: 4/22/16

ILLUSTRATION D: PATCH OF LAND/ GOLDEN BEE PROPERTIES

West LA Fix & Flip

• $1M borrowed

• 44 investors

• $750k reno planned

• 12% interest paid

• Golden Bee profit =

$575k*

Patch of Land

• $61M in Loans (2015)

PeerStreet

• $40M in Loans (2015)How Crowdfunding has made Flipping Houses a lot easier – LA Times Feb ‘16

ONLINE VS OFFLINE

OFFLINE

ONLINE

Investor Exposure Transaction Cycle

180,000+

400 180 DAYS

60 Days

INVESTMENT SIZE | SPEED

Min. Investment of A$340,00028 Asian investors ‘presold’ into investment

Min. Investment of US$100,000*Successfully funded $150M+ Manhattan real estate

400% Oversubscribed in 4hrsFundrise eREIT invests in commercial real estate,

distributing cash to investors every quarter

* International investors

CHINESE INVESTMENT CLIMATE

$525

Million

$33 Billion

Diversify

Cheap

Canadian

Dollar

“Mainland Chinese buyer’s market”Study says 70% of YVR West Side homes sold

to Mainland Chinese buyers (The Province)

Invested in Canadian Real EstateBetween 2008 to 2014, $33 billion invested

into residential and commercial

Diversifying Real Estate InvestmentsNot only investing into residential, but hotels,

resorts, wineries, farms, etc.

Canadian Investments on DiscountDrop in value of Canadian dollar attracts

Chinese investments

CHINESE CROWDFUNDING

Personal Savings

AccountsHengXinLi launched to

give investors access to

international real estate

investments

$21

Trillion

Chinese Real Estate

Platforms In USChinese only platforms

for Chinese investors to

invest into US real

estate

iCross

Ydizhu

P2P Lending

Fraud in ChinaLack of credibility in

Chinese platforms

$7.6

Billion

BENEFITS FOR INVESTORS

DiversificationLower investment

requirements allow

diversification

AccessibilityParticipate in deals

that were inaccessible

before

Speed/FlexibilityOnline tools,

algorithms & analytics

reduce friction

Higher ReturnsNew asset classes

provide higher returns

via crowdfunding

TransparencyImmediate availability

of information through

the platform

Lead InvestorsSyndications/ Invest

along with industry

experts

WHY NOT JUST INVEST IN A REIT?

• Ability to select

specific

geography, sector

& properties

• Not subject to stock

market’s volatility

• Fees may be lower

Cut Out

the

Middle

Men

Marketing

Benefits

Extend Your

Investor Reach

Online

BENEFITS FOR DEVELOPERS/BUILDERS

Lower costs vs.

traditional

funding

$

€¥

£

Big Data

Analytics

24/7

Accessibility

CROWDFUNDING STRUCTURE

Online

Investors

% Stake

Project Owners

Majority

ownership

Special Purpose Vehicle

Land Investment

CROWDFUNDING TEAM/ROLES

PlatformDue Diligence

Distribution

Reporting

Project OwnersBuilder/Developer

Offering/Property/Fund

Service ProvidersLegal / Strategy / PR

Campaign Management

DEAL STRUCTURING

Accredited Investors

Special Purpose Vehicle

Prospectus ExemptionsNo splitting fees, but can not operate as

business offering securities

Small Retail Investors

Exempt Market Dealers3-5% fee for dealers processing

investors, possible partners: Frontfundr,

Waverley

COST/BENEFIT

Loan Origination

Fees

Property

Listing Fees

Investment Management

Fees

Transaction or

Services Fees

$

Investor

Pipeline

Land

Appreciation

LIMITATIONS

Consider

Investment

Fundamentals

Choose right

platform

Consider Liquidity

Don’t forget about

Risk

$

May require

other funding

sources

Requires

platform

approval

For Investors

Early days

Requires

platform

approval

For Project Owners

WHO WE WORK WITH

About Us

o Experience – Built/operated multiple SaaS platforms

o Media – Globe & Mail, Vancouver Sun, CTV, Global

o Speaking - Canadian Crowdfunding Summit, Nail the

Numbers (SK), Canadian Resort Conference 2015

o Blogger – Investopedia, ITBusiness, Crowdfund Insider

o Ambassador - National Crowdfunding Assn of Canada

Bret Conkin on The Exchange with

Amanda Lang – CBC News

Help clients Profit

from the new

Crowd Economy

Services

o Platform Development

o Strategy

o Capital Raising

o Project Management

o Systems Integration

o Operations

o Marketing/PR

o Business Development

WHAT WE DO

Thank you!

CONTACT:

Bret ConkinChief Evangelist

[email protected]

778.323.7297

Crowdfundsuite.com

@bretconkin

@crowdfundsuite