All Forum Posts by: Jim Groves

@Erik Noordamgreat to get the perspective from Holland!  Yes, I was referring to the Dutch investment as a US Fund for simplicity, but it was really an LP investor backed by multiple Dutch individuals. It was explained to me how the investments were syndicated in the Netherlands but I'm sure they didn't go into detail about the regs over there.  I would have to think there is a strong opportunity to do this online as there is a lot of demand for US real estate over there. 

 I agree with Ian's comments, as global buyers are typically seeking trophy assets in Tier 1 (i.e. coastal) markets.  For example, the price that the Chinese investors paid for the Waldorf won't make a lot of sense for a conventional real estate investor as it won't hit a reasonable return even under the most aggressive assumptions.  They invest in those properties because of its relative safety and storage of wealth.  I know some people that manage Middle Eastern money that are seeking similar assets.  Value add strategies just don't interest them.

I don't see crowdfunding investments offering that type of safety.  Investors that would consider crowdfunding opportunities are seeking higher relative returns.  I raised equity on a couple of projects that came from individual investors in the Netherlands.  It was basically crowdfunding before we ever used that term.  The money was pooled in a US Fund and then syndicated to individuals in the Netherlands.  The person that represented the fund was a Dutch national that lived in the US.  If that deal happened today, I suppose you could cut out the fund manager in the US and go directly to the investors in Europe (provided that you comply with our securities laws of course).

 You can find cheap ways to get backlinks, but it's not going to really be of much benefit other than building "vanity" metrics.  Since there are so many real estate crowdfunding platforms out there, cracking the top 5 pages in google searches is extremely difficult for a site that has no market share.

I'm no SEO expert but getting up in the rankings requires patience and strong content that people will want to read.  Cheap shortcuts are not sustainable, nor will they do much to help your credibility which is absolutely critical in this business.

The first thing you should do, if you haven't done so already is to build a Twitter account, Facebook and LinkedIn page.  Next you should register on Crunchbase and Angelist.

The best way to get links that actually generate traffic is to be a featured contributor to industry sites like CrowdfundBeat or Crowdfund insider.  You have to work to get in on the larger publications though.

I know of some platforms that are in the top 10 in terms of market share that have yet to crack into the top few pages of google, and they've been in business for almost two years.  It takes time.

 @Joel A, there are some crowdfunding opportunities (albeit limited) available to non-accredited investors.  The good news is that Texas passed an intrastate law that opens up opportunities for you to invest in Texas.  I believe MassVenture caters to investors that meet the Texas rules.

Agreed, but the difference is that an add-on to the series costs $75 but a new LLC costs $500. It seems to be very well suited for multiple real estate investments

I was looking to use the Illinois version of the series LLC. What was it about it that you didn't like?

John, I thought your original question was regarding the discount rate to apply to the lease.  I think we were thrown off when you said that it was a 30 year lease, because I'm not aware of any tenant that signs for that long.  Regardless, there won't be that much difference in a 30 year vs a 20 year.

The lease payments are tied to the Walgreens credit.  Walgreens is rated BBB-, which is the lowest investment grade rating available.  I don't have a Bloomberg terminal to tell you what their bonds currently yield, but it should be in the low 5% range today for a 10 year deal (roughly equivalent to your lease average life).  There should be a small premium for the lease vs corporate bond, but it wouldn't require more than say 25 bps.  Even at 6%, which would be high, I think you're being too conservative using the 10% rate.  You would probably apply 10% on a non credit lease.

I've been studying this for over a year, and it seems to me that starting one isn't terribly difficult (there are over 100 at one count). What is terribly difficult is figuring out 1) How this investing is better suited for individuals than a REIT (I discuss this on my blog), and 2) How your platform is going to be better or different than the 100 or so that already exist.

"We've been in this business a long time" unfortunately isn't enough of an answer.  From what I see, most of the large platforms are run by relative newbies to this business and they're doing quite well.  Access to a good pipeline of deals while making investors trust your underwriting process is the key to sustainable success.

I'd echo the other comments on here, but add-

2) The post that you inserted the link on is generally correct, I don't think it really differs based on geography but will differ based on size.  Smaller deals tend to come with higher % than larger ones.  Use the gross amount as a sanity check

3) I know of no laws that restrict talking to other investors except for collusion, and that doesn't apply here. The people I'm investing with is a HUGE part of my interest in the deal. Are these people with local knowledge? Will any single investor have majority control, and is that investor conflicted in any way? Do they have the capacity to fund capital calls if necessary? These are important questions that any investor should know. I'd have a very different view of the deal if most of the equity came from TIC investors.

What does "planning to sell these units" mean? They're selling LP interests in the property or they're selling actual retail units?