Whether you are a first-time investor or looking to build an empire through flipping homes, the real estate market is both lucrative and dangerous. You can easily lose as fast as you gain.
As a result of the tax cuts and Jobs Act of 2017 there has been an emerging new trend call mic-investing which is slowly taking over the real estate market. For as little as $5, which is less than a Starbucks drink, wannabe real estate investors can buy shares of properties and build a customized portfolio. One way of viewing properties to invest in is through BNRG Properties, which offers an array of new, used and fixer-uppers.
Janine Yorio, founder and CEO of Compound, a New York City micro-investment application, discusses the benefits of micro-investing. The application helps those looking to get into real estate find their grove but also build their Monopoly empire.
The best portfolios are diversified, and real estate performs very uniquely, in a way that is uncorrelated to the stock market and bonds. We want to offer the same asset class at a lower point. – Janine Yorio
Real Estate Investment Trust
The premise of micro-investing is like that of REIT, better known as Real Estate Investment Trust. One thing that micro-investing does is it allows individual investors to become partial owners of properties they normally would not be able to investor buy on their own. With micro-investing, the method also allows for a lower fee structure, favorable tax benefits, and assets which are not dependent on the rise and fall of the stock market.
REITs are just like owning stock, subject to stock market volatility and other unrelated factors to the actual performance of a property. So, in addition to REITs, savvy individual investors add private real estate to their portfolios for greater diversification and returns. – Darren Powderly
CrowdStreet is similar to Compund, which has an inventory of real estate properties. Founder, Darren Powderly, created CrowdStreet to allow everyday people a chance to get into investing in commercial real estate properties, something that no every-day Joe could afford on their own.
Not only is micro-investing becoming prevalent in real estate, but self-directed investments have also become increasingly popular thanks to the internet. With self-directed investments, there is a parallel with self-direct retirement investments, according to Matt Bronfman, CEO of Jamestown Invest. Jamestown Invest is another micro-investing firm that gives investors the chance to purchase shares in commercial real estate properties in Atlanta.
I think micro-investing and democratization is really interesting and speaks to the future… Democratization of investing coming to real estate is interesting. You can go direct. Traditionally, this is not the way the real estate industry has worked.
– Matt Bronfman
Long-Term Investing With Profit Gains
What can you get with $260? Micro-investing application, Compound, lets people invest in a luxury Miami condominium on the famous, Billionaire Bunker island.
This ultra-posh investment property not only can be yours, but you can say you have a share of an apartment in the Miami Beach Faena House with famous neighbors that include Goldman Sachs CEO Lloyd Blankfein, Citadel CEO Ken Griffin, and Apollo Global Management’s Leon Black.
Presently, Compound has plans to invest $10 billion in properties at some of U.S.’s major cities. These properties would then be opened for micro-investments. Once properties are acquired, the properties will then be liquidated after three to five years with profits distributed amongst shareholders. To date, Compound has raised $2 million, with some major big-name investors including Glenview Capital President John Rodin, and venture capital funds, including Kairos Ventures, Zing Capital, Blue Ivy Ventures, and Republic Labs.
With what they have raised, Compound has four properties which they manage. From Austin, to Miami and Brooklyn. Miami has two properties, while the others have one each.
Not sure if micro-investing is for you? Intrigued as to what is out there? BNRG Properties offers you access to the current real estate trend in Brooklyn.
If Compound is about helping everyday investors, how does Compound make money? The real-estate application profits by acting as the buy-side broker, which is the first step in micro-investing. The role of Compound is similar to that of a brokerage firm.
“We’re looking to give people access to properties they would want to own for themselves and are proud to say they own a part of — but that also makes a great long-term investment,” said Yorio, who said that Compound buys properties with potential for price appreciation over time.