Investing in real estate has traditionally had a high barrier to entry.
Young people hoping to get into the market first have to save for years, or borrow from family. Then, jump through hoops of proving income to a bank in order to buy their first place.
This could all be in the past.
Enter Addy, a form of crowdfunding for real estate, where investors can put money into a property for as little as $1.
“Homeownership without the life-altering sacrifices of home ownership,” is how the company puts it, and making real estate accessible to everyone.
“We believe everyone should have the opportunity to become a homeowner through access to real estate investing at any amount, regardless of income, age, or other conflicts,” reads the modern and approachable website.
The company sold out a property on East 13th Avenue in Vancouver and is currently taking investment dollars for a commercial property on Airport Road in Chilliwack which is leased to a Starbucks for the next few years. The option is positioned as a safe investment; either producing income in the form of dividends from lease payments, or if the property appreciates and is sold, those who own part of it stand to profit.
The move to make investments more accessible is part of a broader trend. Wealthsimple has used a similar model with the stock market - offering easy to understand barrier-free investing accounts with no commissions or account minimums.
The option of easy to access investment is attractive for millennials who might otherwise be unable to get into the market. Imagine young people being able to incrementally put money down on a home.
As with anything that comes easily, it’s important to analyze the risks. A big part of the appeal of investing in real estate is that you get to decide what to do with it and when. With investments through a company like Addy, investors don’t have a say in who the tenants are, or when it’s put up on the market.
Still, the pros of lowering the barrier to entry are many. If more people have a stake in a building, there’s likely more effort put into upkeep. When home ownership declines, an option like this one can help people invest in their communities.
At the very least these kind of innovations shake up a very traditional market – and that’s a good thing.
Ada Slivinski is the Founder & Principal of Jam PR, a boutique agency focused on helping small businesses get big exposure. You can reach her at [email protected]
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