99% of people can’t invest in London and yet this is what the wealthiest have been doing for centuries. Here is why and how you can copy them…
When we were hunters and gathers land had no value. There were no classes.
In the agrarian age, land became valuable due to crops and live animals. There was a two class system. Rich & poor. Those who owned land and those who didn’t.
The word “Real Estate” comes from the Spanish word “Royal Estate”.
“Peasants” comes from French word “payee and sun” which means person of the land.
Tax came from peasants working the King’s land and paying tax for his protection.
To keep the peasants under control the King granted large tracks of land to his friends – Lords and Barons.
This is where Landlord came from.
The landlord collected taxes from the Peasants for the King.
In time of war, the Peasants fought for the King to protect the King’s land rights.
The rich got richer and the poor worked harder.
In the Industrial age – 3 classes arose – rich, poor and middle class.
Land became valuable around factories and middle-class suburbia spread as the middle-class bought houses.
The Kings and Lords sold off their ‘royal estate’, becoming bankers and offering
mortgages so the middle class could buy a piece of Royal Estate. In the UK, many
Kings and Lords kept the land and sold them ‘leasehold’ which means you rent
the land from them and only own the property above it.
The Kings & Lords often to this day own the land.
Today the mortgage is the biggest expense of the middle class
The poor continue to pay rent to their landlords.
Problem for investors
Middle-class Real Estate Investors are recognizing the power of real estate, but do not have an easy & safe way to invest in Real Estate Markets Globally – residential or commercial – and diversify. Thus the 99% CANNOT invest like the top 1%
Added to this in the UK there are even further challenges for getting involved:
Very hard to get mortgages for people not living in the UK and rates are also
Affordability is a major problem and people don’t have enough capital to
Very hard to find and manage an asset overseas.
Hard to find the right partners on the ground.
Why the 99% should invest like the top 1%
49% of the world’s wealth is held in global real estate, which has been inaccessible to the man on the street.
Only 12,9% of the world’s population actually have access to real estate.
Of this 12,9%, in the Western World, less than 1% of people retire wealthy at the age of 65.
We are changing this by bridging the wealth gap
Now with our technology, we’re making Global Real Estate accessible to the other 99% who want to invest like the top 1%
For centuries the Kings, Queens and Wealthiest people in the world have invested in the UK and London. Now you can too, in a simple and safe way using technology & SMART Investing.
Why the UK?
Worlds 4th largest economy
Small island – limited space
Affluent and growing population
Mature economy
Highly educated and world class judicial system
The pound has devalued – buying opportunities now
RICs reliable valuations
Certainty of ownership
Acute shortage of housing and developers are not meeting demand
Low risk
World Class Universities
The fundamentals of the UK and London market are sound with more demand than supply in the right sectors & areas.
Invest in safe, predictable income returns.
Using our blockchain enabled platform we connect quality local property partners with global investors.
We have members in 133 countries, had $85m+ go through the platform and facilitated over $521m+ in real estate deals.
As they say, history repeats itself, now you get to choose.
Do you want to invest like the Kings, Middle class or Peasants?
A REIT or Real Estate Investment Fund is a company that allows investors to buy shares in a portfolio that houses a number of different properties. There are a variety of different types of properties that can be housed in a REIT, including multi-family complexes, hotels, self-storage facilities, retail centres, student accommodation, care facilities and warehouses. Typically though, each REIT focuses on one or two different property types.
To find out more about the different types of REITs and how they work, please read this blog courtesy of partners, Upside Avenue.
Why investing in a Real Estate Investment Trust (REIT) hedges against market fluctuations
Real Estate investing has been one of the top wealth-building mechanisms since the dawn of time. But with recent headlines warning of downturns, people may be wondering if it’s still a smart investment choice in the current climate. That’s where a REIT, or Real Estate Investment Trust, comes in.
A REIT is dedicated to purchasing different types of real estate and is required by law to disburse 90% of its profits. Upside Avenue is a private market REIT, which means it is not listed on the stock exchange.
The Advantages of REIT investing
Private market real estate has a lot of advantages. They do not have to pay all of the fees that a public company requires, nor are their prices inflated or depressed based on the performance of the stock market. This boils down to greater cash flow and a stronger upside for investors.
How the Upside Avenue REIT works
At Upside Avenue, we invest in multifamily communities. These range from apartments to student housing, to senior living facilities. We invest in the best markets with the best growth prospects throughout the United States. This provides a cushion against market volatility as the demand for multifamily housing consistently remains high.
How you Earn an Upside
Investors with Upside Avenue receive a return on their investments from quarterly dividends and from appreciation in the value of shares in the REIT. The returns come from the individual real estate assets in the portfolio via interest and rental income collected, as well as appreciation in the value and sale of portfolio properties. Shareholders receive their pro-rata portion of any dividends that are paid out. We anticipate annual returns of 12-15%
This is an exciting time to invest in multifamily real estate and we invite you to join us on the Upside!
This offering from International Property Solutions, 267 Upper Grosvenor Road, is currently 70% funded. This is a three-unit residential building in Tunbridge Wells, UK. The project is projected to have an IRR of 10%, and Cash on Cash returns of 4% with regular quarterly dividend payments. The offering will be managed by Crestwood Properties. This video shows a brief introduction to 267 Upper Grosvenor Rd presented by Crestwood Property Solutions.
Over the last few months, we have become obsessed with understanding and improving your investment experience. Our team has worked closely with many of our investors, as well as studying the data that tracks our clients’ behaviour on our platform.
We have identified the key areas where improvements to the Platform will make it easier, quicker and more intuitive for you to invest, and track your investments.
Find out more about our new platform by watching this video:
This influx of skilled workers, with an average annual compensation of $100k, is expected to have a substantial impact to the local real-estate market. Furthermore, HQ2 will bring a significant number of non-Amazon job opportunities and indirect investments to the winning city. As an example, it is estimated that over the last seven years, there have been 20 Fortune-500 companies that have opened an R&D facility in Seattle including Apple, Google, Facebook, and Uber. During this time, the “Amazon affect” has generated $38bn of additional investment in Seattle, with every $1 invested by Amazon resulting in $1.40 in the city’s economy.
Amazon’s Real Estate Needs
Amazon has indicated they require a minimum of 500k sq. ft. by 2019, with plans to expand to 8m sq. ft. across 100 acres in the next 10 years. To put this in perspective, Amazon’s current Seattle headquarters is a total of 8.1m sq. ft. and employs 40k workers.
In that same period, home prices in Seattle have jumped by over 83% and rents by over 47% according to Zillow. In the last three years alone, Amazon has gone from occupying 9% of Seattle’s prime office space to 19%. In fact, PwC has named Seattle the top-ranked market in real estate in 2018.
There is no doubt that HQ2 will have a significant impact on the local real-estate economy and will certainly drive massive price increases in both the residential and commercial markets. In fact, some opportunist investors have already been buying up parcels around possible Amazon development zones across a handful of potential HQ2 cities, already driving up prices.
The Amazon “Crisis”
But not everyone agrees that HQ2 is the proverbial golden ticket – unaffordable housing, traffic nightmares, inadequate infrastructure, and increased homelessness are all a common problem in the Seattle area. Furthermore, policy experts have issued a warning to competing cities to not give away too much to attract Amazon, including unsustainable tax breaks or promises they can’t keep. There is even a Change.org petition headed by some of the country’s biggest economists and policy experts urging cities to not bend too far backwards to Amazon.
So, Which City Will Win?
As of January, the competition is down to 20 cities and Amazon is expected to make a final decision sometime in mid-2018. In the meantime, the finalists are going all out to ensure their city is the winner.
The remaining cities include:
Atlanta, Austin, Boston, Chicago, Columbus, Dallas, Denver, Indianapolis, Los Angeles, Miami, Montgomery County (MD), Nashville, Newark, New York, Northern Virginia, Philadelphia, Pittsburgh, Raleigh (NC), Toronto, and Washington DC.
How Can You Take Advantage of the Pre-HQ2 Real Estate Market?
Do your homework and pick a few cities that you think meet Amazon’s requirements, including:
Metropolitan areas with more than one million people
A stable and business-friendly environment
Urban or suburban locations with the potential to attract and retain strong technical talent
Communities that think big and creatively when considering locations and real estate options
Once you’ve narrowed down your list, review the local real-estate market to identify any potential opportunities for investment.
Or, you can log-on to our platform at Wealth Migrate and review our current investment opportunities. With a minimum investment size of only $1000, you can invest in the next HQ2 city before everyone else jumps in.
My top-3 HQ2 predictions? Atlanta, Austin, or Philadelphia.
(Note: As an active investor in the Philadelphia market, I, of course, am cheering for Philly!)
About Wealth Migrate
Wealth Migrate is a global FinTech real estate investment platform that enables people to invest in commercial real estate from as little as $1000 through Collaborative Smart Investing™. We empower investors to build generational wealth through Collaborative Smart Investing™ by facilitating global real estate investment opportunities that surpass standard investment returns. We ensure that our investors and real estate partners interests are aligned thereby generating higher returns for investors with fewer costs and lower risk in a compliant and safe way. Wealth Migrate is the only true global real estate platform with members from over 100 countries and offices in the USA, South Africa, Australia, UK, China, and the Middle East.
Let me be very clear. We will not solve the current problem with the current level of thinking or the present solutions.
In the first 8 years of the 2000’s the inequality was actually being rectified, but from the Global Financial Crisis (GFC) in 2008, the wealthier have got wealthier at a far faster rate than the rest. There is one very simple reason for this. In the early 2000’s due to globalization and rise of the middle class in the emerging markets they increased the broad base income. However since 2008 there has been a dramatic increase in the value of the assets. Real Estate, Stock Market, businesses, collectables or even Cryptocurrencies. The top 1% are heavily invested in a diversity of assets, not only locally but internationally and this is why their net wealth has increased so dramatically in proportion. Assets increase far quicker than income growth.
And the so the question is what about the rest? Why do the 99% not invest in the same assets as the top 1%?
There are 3 reasons:
Knowledge
Financial Exclusion
It is not good for the top 1%
Knowledge
Our education system is broken. No one is taught financial education. We are taught language, science, biology, history, geography, etc but why are we not taught business, sales, marketing, people skills or how to balance a profit and loss account. Why are we not taught about investing?
The middle class think that investing in houses and apartments, buying THEIR home, will make them wealthy. Prices around the world statistically keep going up every 8 to 10 years, due to economic and political management of the economy and a focus on inflation which ensures this happens. It makes them feel wealthy and it is called the Wealth Affect which ensures the middle class to keep consuming things.
Middle class people tend to focus on capital growth.
Truly wealthy people (the top 1%) do something different. They invest in different assets. They invest in commercial, institutional grade assets and they focus on income, as one’s passive income is actually a true symbol of wealth. Whether this is medical real estate or Coca Cola shares, it is the same principle. Why do you think Warren Buffett invests in Coca Cola, it is one of the best paying dividend (income) shares.
Wealthy people focus on income and actually just use common sense (WHICH WE ALL HAVE).
Financial Exclusion
In 2009 I met two very wealthy men and they were investing in medical centers in Australia. I remember asking them, “Why medical?” Hennie who had been investing in medical real estate since 1992 explained to me that firstly no matter what happens in the economy people need doctors, secondly doctors never leave their premises and thirdly they are wonderful at being doctors, but not financial experts and so sign excellent long term favorable leases. I remember thinking I had helped over 2500 people invest in houses and apartments, had a Honours and Masters Degrees in this topic and yet why has no one ever taught me this. It is such common sense. I asked how I could participate and they said the minimum investment was AUD $5m per person. I couldn’t get involved. 8 people invested $40m and today, 8 years later, this is a listed company worth over $700m on the Australian Stock Exchange. This is financial exclusion.
Another example is the accredited / sophisticated investor status in many jurisdictions around the world. This makes no sense. It is there to protect the ill informed and the grannies with their pensions. Thus they are not allowed to invest in sophisticated (quality) investments. They are always last to find out or be able to participate in an investment and are basically at the bottom of the value chain. All in the name of their protection. Funny though that we need to protect these people and yet they can gamble (recklessly) any amount of slot machines or in Vegas. Better yet they can invest in middle class investments like houses and apartments, with Americans wiping out $10 trillion in value as the USA house market crashed in 2008.
The middle class invest in these houses or on the stock market through mutual and hedge funds which are laden with fees. There is no transparency and yet in the name of THEIR protection, the clever financial advisors and financial institutions will look after their financial well being. Interesting that in the last 100 years less than 1% of people who retire in America, the UK and Australia actually retire wealthy at 65.
Compare this to the top 1% who invest differently. As an example are our various partners in medical real estate in America. While residential crashed by as much as 70% in some states in 2008, they never lost a medical tenant. Yes, you heard me right, they never lost a tenant and thus they never lost their income. With a strong cashflow, as the middle class were focusing on capital growth, floundering and getting into distress, the top 1% was able to acquire more distressed assets, accumulating more wealth, exactly what Hennie and Pieter were doing in 2009.
Finally the above does not take into account the 3 billion unbanked people, 87,1% of the global population who has no access to real estate at all or the people who live on a marginal income and are exploited with cash loans, pay as go data contracts, funeral policies, high cross border money transfer fees, etc.
It is not good for the top 1%
The twentieth century and current economics is all based on scarcity. The thinking of everyone is that to economically empower the 99% we would have to take away from the top 1%. Due to this, the top 1% has done everything in their power to protect their position. They do not teach people what they need to know, they do not provide them access to opportunities using regulation and protection as the reason and most importantly keep them happy with inflation, social services, government support systems, consumerism, media messages, etc.
While people live in bliss and ignorance they keep going to school and university to be trained to be employees, pay taxes, they keep investing in the current financial system and thus paying the fees which pay the shareholders returns of the top 1%.
If the 99% were to also get access to the best opportunities then asset values will go up and the 1% will struggle to continue to control the quality assets – whether that is in real estate, stock market, new businesses, etc and thus control the income.
The masses are controlled by access. First it was the Church who originally controlled the masses with access to information and this was only solved through the technological invention of the printing press. Then it was the Monarchs who controlled access to land, again solved through technological innovation of the industrial revolution and now the Financial and Political Systems control people with access to knowledge and opportunities with regards to wealth.
If you want to understand more about this I highly recommend you read the book by Robert Kiyosaki which explains this in a lot more detail – Second Chance.
It is time for a change and once again technology is going to provide the answer. There are 8 major macro trends which are all converging and will provide the solution to solve the Wealth Gap by 2020:
Gamification & learning while doing, fundamentally changing the education system, going back to natures laws and allowing people to learn while doing.
Blockchain & crypto currencies, increasing trust and reducing friction costs massively. Blockchain is decentralising trust and ensuring there is no need for a middle man or institution anymore. This is a great video to understand the impact of the Blockchain – click here
Social Commerce & Collaborative SMART Investing, increasing returns and reducing risk for investors.
Personalization and people wanting personal solutions for them and their families. They want the power to create the freedom they want in their lives and have a meaningful connection with their investments.
Rise of the middle class in emerging markets and 3 billion people unbanked people joining the global economy through mobile adoption and internet connectivity.
Globalization and with local volatility investors wanting to be diversified across countries, assets and currencies. Cyrptocurrency’s, mobile adoption and internet connectivity are allowing everyone to participate and to allow true globalization.
Social pressure to democratize access to wealth to empower the 99%.
Investors wanting to have a purposeful impact on co-creating the planet they want to see.
On the 15th December 1491 the Bill of Rights was Voted into the American Constitution. It is widely seen as the beginning of democracy and freedom for all. Today 143 countries out of 193 on the planet have adopted this democracy for all.
It is time to create democracy for all when it comes to wealth.
Every single person on the planet, whether a rice farmer in China, a rickshaw driver in India, a goat herder in Africa or an investment banker in New York understand the intrinsic value of real estate, whether they have access or not. Our belief is that with Blockchain and a crypto currency based on real estate, we can truly democratise access to wealth. 49% of the worlds wealth is held in real estate and yet only 12,9% of the population have access to real estate.
On the 15th of December 2017 we are launching the WealthE Coin as this day will represent the day where once again a technology solution solved one of the worlds greatest challenges and provided access to wealth for the 99%. The WealthE Coinwill truly democratise access to wealth for all and help create a better and more sustainable planet for all. Our vision is to make investing as simple as a swipe of a finger from $1. When we achieve this we will be able to empower every single person on the planet and enable them to be wealthy!
I want to finish with a great video from David Orban. He is a global authority in this space, recently invested in Wealth Migrate and the WealthE Coin and is an adviser to our Board. Here is where he sees the future of wealth – https://youtu.be/lKsXlA1424s
To a better future for all and thinking differently to solve this challenge. It will require abundance thinking to solve this grand challenge!
The new Tax Cuts & Jobs Act was signed by President Trump on December 22, 2017 and ushers in one of biggest tax reforms the country has ever seen. The law is expected to be extremely beneficial to the public by offering significant tax breaks across the board, which will result in more savings and additional investment by both companies and individuals in the US. The Real-Estate industry is especially poised to benefit from the tax bill, as economic growth will fuel the demand for commercial real estate across the country. In addition, there are a number of provisions in the new law that will benefit the real-estate sector specifically. These provisions include:
A deduction of up to 20% for individuals and trusts that report qualified business income earned through Pass Through entities. Pass Through entities are companies (partnerships and LLCs) that do not pay direct corporate tax, and rather “pass through” their gains and losses to the individual members of the company or partnership. As most real-estate investments are structured as pass through entities, there should be significant benefit for real estate investors.
An allowance for immediate expensing of qualified personal property. This now includes any investments in roofs, Heating, Ventilation & Air Conditioning (HVAC) Systems, fire protection, alarm systems, and security systems among other qualified property expenses. This can be extremely beneficial to real-estate professionals as they can now invest in critical infrastructure for their properties and take a 100% expense in the first year.
There were a number of provisions that either did not get passed in the final bill, or elected to maintain favourable tax treatment for the real-estate sector including:
Existing 1031 Tax Breaks Still In Effect. The new bill maintains some of the existing tax breaks that positively affect real-estate investors, including the 1031 tax-deferred rules. This rule allows investors to defer capital gains on the sale of a property by reinvesting the proceeds into another similar asset. While the new tax law excluded personal property from this provision, it does maintain real-estate thereby allowing real-estate owners and investors to defer taxes by reinvesting their proceeds from a sale.
No changes to depreciation lives. The senate had proposed to change the depreciation periods of non-residential and residential real-estate from 39 years and 27.5 years respectively down to 25 years. While this provision was not included in the final bill that was passed by President Trump, real-estate owners and investors can still benefit from the standard depreciation write-offs which can be extremely beneficial in minimizing taxable income on a property.
Change to the Carried Interest Holding Period. The new law also changed the carried interest provision holding period from one year to three years. Carried interest allows sponsors and investment managers to take their share of profits at the lower capital gains rate rather than personal income rates. While the change in holding period may affect other industries such as private equity (where there might be a shorter investment hold period), the real-estate sector is typically a longer-term investment and as such will not be adversely affected by this change.
In summary The Tax Cuts & Jobs Act is expected to reduce taxes for individuals and corporations, thereby creating new jobs and accelerating the economy. The bill includes new provisions and maintains existing laws that benefit the real-estate industry. The change will enable additional savings and investment in the US, and will facilitate a stronger real-estate market overall.
About Wealth Migrate Wealth Migrate is a global FinTech real estate investment platform that enables people to invest in commercial real estate from as little as $1000 through Collaborative Smart Investing.™ Wealth Migrate empower investors to build generational wealth through Collaborative Smart Investing™ by facilitating global real estate investment opportunities that surpass standard investment returns. Wealth Migrate ensure that investors and real estate partners interests are aligned and thereby generating higher returns for investors with fewer costs and lower risk in a compliant and safe way. Wealth Migrate is the only true global real estate platform with members from over 100 countries and offices in the USA, South Africa, Australia, UK, China, and the Middle East.
In today’s world, within any given industry, there are many investment vehicles available to us and when it comes to real estate investment, it’s no different.
The most conventional way of investing is by directly purchasing a residential investment property, which comes with the added responsibilities of property management and upkeep. This method is becoming increasingly more difficult with some global markets setting unattainable high entry prices like Australia as well as many of the major cities around the world.
For some, this method is still a viable investment option but has proved to only really be affordable for the Ultra High Net Worth Investors (UHNWI), because these options are not always available to all people. It is generally considered that 99% of the world population, just don’t have access to the same options as the top 1%.
With the median house price set at $865,000 in Sydney Australia, a 70% increase on five years ago, many people do not financially qualify for direct residential real estate investing. Commercial real estate is unachievable in that the deposit alone generally equates to millions of dollars. This does not consider having the knowledge or access to the right opportunities in the right markets or right countries.
It is interesting that according to the latest Wealth Report by Credit Suisse, UHNWI with a net worth more than $10m are increasing their exposure to direct real estate investing, specifically commercial, as it is a safe asset class, based on income producing assets and no correlation with corrections of the stock market.
However, now there are more options available to investors who wish to enter the real estate market and benefit the positive returns that these investments can yield.
One investment method that has earned great interest over recent years is Real Estate Investment Trusts (REITs). These are specialised Mutual Funds, focused on investing in real estate. They are a tradeable security usually traded on stock exchanges such as the ASX, NYSE, etc and therefore are quite liquid. However, with liquidity comes greater risk in that REITs are financially correlated by more than 70% with the stock markets so volatility is often dependent on general market sentiment.
REITs invest in many commercial properties and therefore it can be difficult to know exactly which direct stock you are investing in without knowing the constituents of your REIT. Investors own a share of the total fund and not directly in a share of the underlying property. If you don’t know exactly which properties you are investing in, it’s hard to complete a thorough risk assessment to an already established fund for example if a REIT has invested heavily in one market or area, this can create higher risk should that market or area’s property value decline. Due to these factors, diversification isn’t easily obtainable when investing in a REIT.
The fee structure of a REIT is generally based on the AUM (assets under management) and is not generally aligned with the investors long term interests. They carry large overheads and many middlemen who often facilitate the sale and marketing of REITs from financial planners, consultants, bankers and listing services often diluting the net return to the investor.
Research done by Tony Robbins in his 2017 book, Unshakable, confirms that 96% of Mutual Funds do not beat the market average over a 15-year period. However, because people are generally ‘educated’ on investments by the financial industry and the middlemen who service the industry they don’t often understand the impact of fees on their investments and the actual returns of their investments against benchmark market averages.
Our belief is that through education real estate investing can become common knowledge and that everyone can make better-informed decisions, especially if they have the systems to help support them in this decision making.
Finally, this method of investment isn’t suited to those people who enjoy the hands-on approach to managing investments or who like to make a meaningful contribution to the macro trend which is growing globally, which is a cultural disruption (the increasing desire of people to be meaningfully involved with what they buy, the things they do and where they invest).
Besides Public REITs there are also Private REITs which are very similar although they don’t have the transparency, regulation or liquidity of the Public REITs. Their success is based on the ability of the person or company running the Private REIT and is very focused on local knowledge and expertise of a small team or sometimes even one person.
Now, there are other options besides the conventional direct way and REITs.
Enter Syndication.
Since the 1980’s there have been different forms of syndication where ‘experts’ find a property and then invite investors to participate. They generally charge a fee upfront for putting the investment together and then they pay middlemen commissions to fund the deal. In some cases, the fees on the front are as high as 26% of your initial investment, which technically means ‘you out of money’ before the investment even starts. You are also not aligned with the syndicator who only does deals upfront and is not involved in the performance of the investment.
Their track record is generally poor and they have only been able to buy the deals that no one else wants – Direct, REITs or Funds.
Enter Crowdfunding.
Real estate crowdfunding is a type of direct real estate investment that allows multiple people to invest smaller amounts of capital to fund a purchase collectively. Crowdfunding is an up and comer. This investment vehicle can negate a lot of the negatives of the conventional and REITs styles investments.
One note: People get caught up in acronyms. Whether you call it crowdfunding, FinTech or PropTech, in simple terms it is technology coming to the real estate space. Whenever technology has come to any other industry and disrupted that industry it has done 3 things:
Cut out the middlemen
Cut the costs
Increased the trust, transparency, and accessibility
More specifically in real estate, the benefits of technology are numerous:
You can select the exact property or project to invest in
By having this option, you can do your research on the micro and macro economic factors pertinent to that property and the surrounding area. This gives an excellent advantage to the investor. You know exactly what property you have invested in and therefore can determine the risk it brings to your overall investment portfolio.
Is not publicly traded.
Because your share in a crowdfunded property is not publicly traded on stock exchanges, it means more stability in values. With stocks and other tradeable securities, they are valued on a constant basis and are usually highly volatile. As the research above showed REITs have a correlation of more than 70% to the stock market. Although the underlying asset is real estate, it is far more a financial instrument which is linked to the sentiment of the stock market. This risk is mitigated through crowdfunding.
Low costs, regular returns.
Unlike the conventional method, crowdfunding has very low initial and ongoing costs. You don’t have to pay extra for a broker to broker the deal and you don’t pay for management costs. You do however receive a share of the regular rental income and when the property is disposed of, you receive your share of capital gains profit.
Smaller initial investments.
With most capital cities in Australia sitting at a median house price over $500,000, it’s becoming more difficult for many people to invest in real estate. This is no longer an issue with crowdfunding options. From as little as $1000, you can secure your very own portion of real estate. This is not only great for broadening the scope of investors, but also provides for the ability to diversify and reduce risk. This is not to mention commercial property which is even less accessible for more people. Through crowdfunding, people can now access this as well now from as little as $1000.
Diversification and minimised risk.
If you have $10,000 and want to invest in property, your options have been minimal until the last few years. Now, you can invest 10 lots of $1000 in ten different properties to reap the benefits of diversification. If one market, suburb or state’s property values tank, then you don’t lose all your money because you have invested in many other properties in differing markets.
The are a few problems with crowdfunding to-date:
All the platforms are local in-country operators and therefore people cannot diversify out of one country or currency. If they do they have to manage their properties on many different platforms, while also having to worry about bank accounts, tax, structuring, money transfers, etc.
The crowdfunding platform operators are often technical people who have built a great platform but don’t have substantial credibility in verifying good markets, partners or projects. They aim to have a lot of selection, but the quality of the investments and the long-term returns are yet to be verified.
As the platform merely facilitates the transaction and takes a fee up front (can vary and be quite high), it is hard to determine what will happen when and if one of the projects is not performing, (this ties back to experience above) and what the long term performance will be.
Enter Collaborative SMART InvestingTM
Essentially Collaborative SMART InvestmentTM is uniting the knowledge base of industry experts – practitioners or partners in specific industries, countries, and markets with specific product knowledge, platforms or marketplaces and their systems and their purpose driven mission. It is based on the principles of Collaborative Investment (click here to see this article), however it is adding social purpose.
To solidify this concept, the practitioner or partner needs to be a co-investor to align the interests to the investor and the platform. This allows for a more in-depth level of due diligence and research which leads to better-informed investment decisions, more thorough product understanding and a significant reduction in risk. There are many aspects with respect to research which needs to be understood and evaluated to make better investment decisions by the Investor.
Two of the most important components are product knowledge and macro and micro market analysis based on the fundamentals of investing. Once this is understood, it is critically important to understand the value proposition and correlated risks. An example from Wealth Migrate is that a property partner would need to understand the medical commercial field and have more than a 10-year track record in delivering and executing on this type of product. Then it would have to be in a country and city where the macro and micro fundamentals are right. Things like currency, rule of law, protection of assets, population growth, affordability, value, taxes, supply, and demand etc. As a further example, one can look at America now because it is safe and has the right fundamentals, but not Russia. Then in America, we would only look at cities like Atlanta or Texas and not Detroit. Wealth Migrate’s GIDDSTM System (Global Investment Due Diligence System) is a globally recognized system to provide investors with a tool, not only to get access to partners in the right markets, but also for them to be able to understand and ascertain the risk/reward correlation and allow investors to make the best investment decisions for themselves.
Collaborative SMART InvestingTM alsoallows the Partners to extend their understanding of the products from an investors point of view. Another major benefit for the partner is providing them with a digital track record of their past performance, something which companies in other industries like hotel groups with Trip Advisor or Retailers with Alibaba have found essential to success in the digital economy.
Collaborative SMART InvestingTM differentiates from “collective investments” and/or “collective investment schemes” (“CIS”) in that it is not investors pooling their investment in a fund and which is administered by a fund manager. Usually CIS attracts high fees and the investment is in a fund that owns different properties. With Collaborative investing, the investor invests in a particular property with a return and/or income relating directly to that particular property.
A critical question all investors ask is how reliable is the information from the partner. Is it accurate and objective? Wealth Migrate’s belief is that if the partner’s assets/money are invested alongside the investors, chances are they will work hard to be accurate, timely as possible with the information they provide and execute effectively on the opportunity. This is not to mention that their digital reputation will also be on the line.
In the traditional Funds, REITs & Syndication they hire many consultants into their companies, who are experts in their respected fields, to analysis the risk and make investment decisions. However, because the consultant does not have any risk involved it is easier to postulate information under pressure, which can lead to misguided investment decisions. This is important when also taking into account the alignment issues we have spoken about above with the fee structure.
For Collaborative SMART InvestingTM to truly fulfill its potential all experts/partners feedback, including the marketplace, must be collated in a balanced manner, without regional bias and be presented clearly for investors to make the right decisions for themselves. At Wealth Migrate we are always looking for ways to improve the customer experience (CX) and tools to make investment decisions as simple, safe and personalized as possible for our investors.
The components which make this type of philosophy work are: first you must find the right local partners on the ground in the markets where you want to invest, second you must get them to invest, third you need them to believe in the model, fourth you must conduct regular meetings, fifth and most important of all, you must create two-way communication between the partners and the investors, using the platform as the medium.
Building a network of local partners and global investors takes time; however, if applied properly the benefits can be very rewarding. Most people understand this, however, to execute is far more challenging.
In the past, this was virtually impossible for people to do on their own, REITs are generally in one country and even one sector and even for the over 250 local real estate crowdfunding platforms which are based in-country around the world, this has proven to be a bridge too far. Now with Wealth Migrate, global investors can tap into our Trusted Global Real Estate Marketplace which we have been building for more than two decades and it is all based on partnerships, relationships, the platforms and the principles of Collaborative SMART InvestingTM.
Therefore, we believe that crowdfunding is merely a stepping stone to a far bigger purpose and it is only one of the pieces which have been adopted to provide a service which is 10x’s the original concepts of crowdfunding.
Using Collaborative SMARTl InvestingTM, Wealth Migrate has been able to surpass normal investment results, generating higher returns, with fewer costs and lower risks in a compliant and safe way. This is to the benefit of the investors, the partners, and the platform, with all interests aligned.
Investors have the option to invest in multiple countries, and different real estate asset classes i.e. residential, commercial and multifamily and currencies and therefore diversify like the most sophisticated investors, in a simple and safe way.
The investor benefits throughout the process and ‘learns while doing’ and because they understand that Collaborative SMART InvestingTM does cost them it allows the freedom to contribute to the process replicating the social laws of nature and why it is so sustainable, effective and efficient.
Finally, it has to be about purpose. Here is how we will use CollaborativeSMART InvestingTM to not only enhance the lives of every customer we touch but also be purposeful and solve one of the greatest challenges on the planet – The Wealth Gap.
Wealth Migrate has pioneered the Wealth Movement, whose mission is to empower a billion people by 2020 and create a better and more sustainable planet for all. Go to www.wealthmovement.com for more information.
Join us, let us help empower you to create the economic freedom you want in your life for you and your family, while also having a purposeful impact on the planet.
Conclusion
While the conventional Direct method, REITs, Syndication, and Crowdfunding are both common and viable investment options, Collaborative SMART InvestmentTM offers a hybrid investment option taking the best bits of all worlds opening the door to a larger scope of investors globally.
Investing in real estate is generally accepted as a good decision. 49% of the world’s wealth is held in real estate and there is a reason that there are sayings like, “He who owns the land is King,” or why most middle-class people endeavor to buy a house.
Because of technology, there’s never been a better time to begin investing in real estate with so many options available to you. It all comes down to your risk tolerance and much capital you want to invest. When conducting your risk analysis, consider Collaborative Investment Platforms and all they must offer. As stated above technology is disrupting the real estate and investing space and it is only a matter of time that more people will realise it is simpler, safer, easier, quicker, personalised and can provide above average returns for investors.
Scott Picken, Founder & CEO of Wealth Migrate, the Trusted Global Real Estate Marketplace said, “I get asked all the time what is the difference between these options. My simple answer is that when I used to catch a yellow taxi there were four wheels, a driver and an engine and it took me from A to B. When I catch my Uber it has four wheels, a driver, and an engine and it took me from A to B, both are cars. So, what is the difference? In my opinion, Uber is much more trustworthy, transparent, cost effective, simple and safe and technology has made the process much more efficient. REIT’s, direct investing, syndication, crowdfunding and Collaborative SMART InvestingTM are all about the real estate investment but technology is making the investment process much more efficient and Collaborative SMART InvestingTM is making it sustainable, trustworthy, transparent, robust, safe and global, where all parties interests are aligned.’’
Amongst the challenges of learning to adapt to a new culture, and learning to balance my academic and social life, the biggest challenge was financial. My parents did the best they could to support my academic endeavours, but I still faced financial challenges. As a child, I did not have any entrepreneurial influences around me, and I grew up knowing the cliched approach of excelling at school so that I could get a good job, and work hard to climb the corporate ladder as an employee.
As a self-sponsored student in a foreign country, I had to find a way to pave my way through school and it was this desperate need to survive, that planted the entrepreneurial seed. As a University student, I got involved in many “business” ventures, from buying and selling laptops and cell phones on campus for a profit to selling second-hand shoes in Johannesburg CBD, to the exporting of goods to Zambia and Malawi.
After I graduated, I jumped into what I was conditioned to do my whole life. I found a job and was hoping to climb the corporate ladder, in pursuit of “success”, however, I found that I was not fulfilled because I felt under-utilised. This re-triggered my entrepreneurial spirit, and I started to look for business opportunities I could pursue, whilst still employed. I attempted many business ventures, most of which failed, but was able to create a sustainable, profitable business with one of the ventures. In hindsight, the reason for the success was that I had teamed up with the right business partner, and we built a competent team. I met my wife, during this period and fortunately, she shared a similar drive for entrepreneurship. She too had had many attempts, at business, that did not take off. We naturally extended our relationship, to become business partners, and this has worked well because we have different personalities and strengths, that complement each other well.
After our first child’s birth, I became insecure about my family’s future financial well-being and realised that generating an income from my salary and the business did not provide much security for our future. This led my wife and me to start learning about investing in property. Before long, we had invested in a few properties around Johannesburg (where we live) and were satisfied with our investments. The main challenge we faced was that we did everything ourselves, including, searching for the properties, calculating the Internal Rate of Returns (IRR) on the property, due diligence, process of securing the property, and after we secure, we still had to do the advertising, tenant screening, property maintenance, monitor rental payments, etc. It was initially painstaking, but we realised we had to start putting systems in place, to avoid burnout.
Our passion for property investing ensured we had an eye out for great deals, and we started finding better yielding properties outside of our comfort zone of Gauteng. We realised we had to change our approach, because we would not be able to do everything ourselves anymore, due to the logistical impracticability. Luckily, my early business experiences taught me the power of leveraging off of the RIGHT partners. When we came across a property that ticked all the boxes, albeit, in Cape Town, we were fortunate enough to find the right partners on the ground. They helped us to purchase, tenant and maintain our first property, and to top it all, an acquisition outside Gauteng. We have received our rentals, in full and on time, without ever even seeing the property live.
The global financial crisis of 2007-2008 created opportunities to find great property bargains, especially in the United States of America, amongst other countries. I was well aware of this but had absolutely no idea how to take advantage of this. After my experience with investing outside Gauteng, I was keen to find the right calibre of partners that would enable me to access properties outside of South Africa. Due to the increased complexity of investing in a foreign country, from everything including the correct investment structures, money movement between the countries, bank account opening, company registration as a foreigner, tax and legal challenges, etc, I was well aware that I had to carefully select the partners I need to work with. [note: by implication, as being portrayed as a partner of WM, the message is that WM is helping with all of this, which technically we don’t and/or not registered for. I would reword the sentence: “the challenges of offshore investment became very quickly and clear to me, from having an investment structure, money movement between countries, bank account opening, company registration as a foreigner, tax, and legal implications. I just dawned on me again, I need to select the Right partners to work with on this”]
After a lot of research, and extensive due diligence, it was a no brainier for me to partner with Wealth Migrate (WM). Using the WM’s platform enables me to leverage off of competent partners on the ground, and this gives me access to first world assets, without the headaches. The advantages for me personally are:
• I am able to own a stake in real estate investments in Australia, America, England and South Africa
• The investments are income generating (with quarterly dividend payouts)
• The deals are structured such that there is a defined exit strategy
• I do not have to screen the properties
• I do not have to manage tenants
• I am not directly involved in the property maintenance
• I do not have to worry about the processes of purchasing and offloading the property
• I do not have to fly to the different countries in order to participate in their economies
Nkandu Chitah’s business interests include:
Co-founder and Managing Director of Buna Projects and Consulting, an Engineering Design and Installations Company;
Co-founder and Business Development Manager of Ikhaya Luxury Kitchens, a design and Installations company for Kitchens, and BICs
Co-founder and Chairman of Chimi Resources – a mineral processing and beneficiation Company
Nkandu is also an avid Property Investor and a partner of Wealth Migrate
Crowdfunding, which has already made huge economic waves in the United States, Europe and Asia, is a method of financing or raising capital that harnesses the power of the masses, or the “crowd” to fund a project, business or endeavours, typically via the Internet. Mas solution, a research, advisory and implementation firm that specialises in crowd sourcing solutions for private, public and social enterprises, says that the global crowdfunding market will reach $34.4B in 2015, and is set for continued explosive growth. In nations where Crowdfunding is legal, it has levelled the economic playing field, giving access to capital needed for wealth creation to women and minorities that typically are under served by traditional capital markets.
“There is a huge wealth gap in the emerging world, and crowdfunding is a solution to close this gap,” said Scott Picken, founding member of the African Crowdfunding Association and CEO of Wealth Migrate, a global online real estate investment marketplace. “Crowdfunding can provide equal opportunity and equal access to capital that is essential for wealth creation within under served populations. The ACfA will educate not only the public, but also the policymakers about the benefits of crowdfunding for Africa.”
Wealth Migrate and Thundafund have partnered to lay the groundwork for the ACfA and are urging policy makers and others passionate about increasing access to capital to join them.
“We see crowdfunding as the democratisation of financing for entrepreneurs,” said Patrick Schofield, CEO and co-founder of Thundafund. “Thus far we have been thrilled to see the outpouring of African and global support for African entrepreneurs that have had the courage to launch new ideas into the world.
There are so many inspiring entrepreneurs in Africa who could do so much to change the world with access to capital. Crowdfunding is the next-gen solution to Africa’s development agenda.”
Organisations and individuals that have given their support include:
Dan Marom, renowned expert in the field of crowdfunding and author of the pioneering books, “The Crowdfunding Revolution” (2010, 2012) & “Crowdfunding: The corporate era” (2015).
Paul Niederer, leading authority on Investor Aggregation Solutions, Collaborative Investment and Crowd sourcing
Ronald Kleverlaan, Co-Founder of the European Crowdfunding Network; Founder of Crowdfunding Hub
Scott McIntyre, vice president of the Crowdfunding Professional Association – http://www.cfpa.org/
Xiaochen Zhang, Co-Founder of the Crowdfund China Society; Director at the Crowdfunding Professional Association
Joy Schoffler, Principal of Leverage PR and CFIRA board member
The ACfA has already received support and recognition from similar industry bodies around the world which have been instrumental in the process of bringing crowdfunding awareness and implementation to their region. Xiaochen Zhang, who set up Crowdfund China Society and works on crowdfunding for the World Bank, has agreed to sit on the board. Dan Marom, who advised on and influenced the passage of crowdfunding regulations by the European Union, has also agreed to sit on the board. Along with the parties above, they are providing the ACfA with a blueprint and framework which has already been previously successful around the world.
About Wealth Migrate
Wealth Migrate is a leading international real estate crowdfunding platform that offers global investors direct access to exclusive real estate investment opportunities in premier markets around the world, including the U.S., U.K. and Australia. Investors benefit from the extensive experience of the Wealth Migrate executive team, which has collectively facilitated more than $1.34 billion on five continents for clients in international real estate transactions. For more information, visit www.wealthmigrate.com.
About Thundafund
Thundafund is South Africa’s leading online Crowdfunding Café and marketplace for creatives and innovators. Through Thundafund, entrepreneurs with their respective projects and ideas can raise capital and build a supportive crowd of backers through the process of crowdfunding. For more information, visit https://www.thundafund.com.
Written by Kevin Allen, Chairperson of ACfA
“Wealth Migrate was not the author or producer of this article, press release, or publication and is the view of the writer and or publisher. All references to WM is by inference and as such WM hereby disclaim any reference to WM being a crowdfunding platform, a registered crowd funder and or regulated crowd funding company. WM is a global real estate market place and offer real estate investment opportunities to its members. Wealth Migrate does not accepts any responsibility for any loss or damage of whatsoever nature that maybe caused or brought about, directly or indirectly, by the reliance on this article and our publication and does not accept any liability for reliance placed thereon. Past performance is no guarantee of future performance. Any investor must obtain independent financial, legal and tax advice before making any invest and or relying on any of these articles or publications.”
