As the roboadvisor market continues to grow, the self-directed investing movement is impacting the real estate world as well. These online platforms, such as RealtyShares, Fundrise, and EquityMultiple have attracted millions of dollars from individual investors. Earlier this year, RealtyShares said it raised more than $840 million and just yesterday EquityMultiple announced it raised $3 million in a recent funding round with Ken Pasternak, founder of KABR Real Estate Investment Partners, as the anchor investor.
Dov Gertzulin's DG Capital is having a strong year. According to a copy of the hedge fund's letter to investors of its DG Value Partners Class C strategy, the fund is up 36.4% of the year to the end of June, after a performance of 12.8% in the second quarter. The Class C strategy is Read More
According to the EquityMultiple's press release, 2018 was a period of growth for the Mission Capital-backed startup. With investments through the online platform doubling this year, investors have invested in over $700 million in commercial real estate transactions and the firm expects to reach the $1 billion mark later this year. Investments are only open to accredited investors.
CEO Charles Clinton said, “Traditionally real estate investing has been largely limited to institutions, which has caused enormous market inefficiencies and unfulfilled demand among individual investors. Our goal is to make commercial real estate part of every investor’s portfolio, providing diversification outside of the public markets to an asset class with historically strong uncorrelated returns. This funding round brings us one step closer to that goal.”
When asked about specific opportunities he sees for commercial real estate investors, Clinton told Value Walk he is looking at Opportunity Zones as the next big thing. The Opportunity Zone program is a tax incentive for investors to re-invest unrealized capital gains into Opportunity Funds. These funds are dedicated to investing into Opportunity Zones - census tracts designated as poorer areas. "Simply, our view is that Opportunity Zone Funds represent one of the biggest investment opportunities to hit the real estate market in decades,” said Clinton.
He added, “The potential to both defer existing capital gains and pay zero tax on the Opportunity Zone investment itself fundamentally changes the economics of investing in these areas. As investors come to better understand the tax benefits, we expect to see a massive influx of money into these zones, providing a powerful boost to the local economies in the process.”
Marious Sjulsen, co-founder and CIO of EquityMultiple outlined EquityMultiple’s approach. “Our strategy has always been to partner with top institutional firms and executives within the real estate industry. This latest investment from Mr. Pasternak reinforces this approach and reflects the strong reputation EquityMultiple has among the leading minds in commercial real estate and financial technology.”
Investors use the firm’s online platform to invest throughout the capital stack (syndicated debt, preferred equity, and equity) in various types of commercial properties. The firm’s website also boasts their strong real estate pedigree as backed by Mission Capital, a real estate capital markets provider, and not by venture capital.
Sjulsen also said, “We are well on our way towards disrupting the distribution model for real estate investing by providing our growing investor base with access to curated private market opportunities.”