60 Investors, One Hotel

If you only had $50k to $100k in your pocket and wanted invest in a hotel, chances are you’d only find one by playing SimTower on your iPad. (You'd also have a pretty giant pocket.) But crowdfunding is changing that by bringing more smaller investors into the mix.

Prodigy Network has four such crowdfunded hotel projects, says CEO Rodrigo Nino—extended-stay properties 17 John and AKA Wall Street in Manhattan's Financial District, as well as hotel components in Bogota, Colombia's BD Bacata and Aeropuerto Business Hub. AKA Wall Street netted 60 investors and $25M in equity, and now the JV of Prodigy Networks, Korman Communities, and Shorewood Real Estate Group will invest $40M to redevelop the property, which it bought last month for $110M. And 17 John just opened for funding with Real Estate Participations (REPs) going for $100k each, he says. Previously, investors with that type of profile were limited to buying residential condo units to rent out, only to find they were management intensive, unpredictable, and offered 3% to 4% returns at best. "As long as a third-party fiduciary is involved, investors in crowdfunded projects could see the same returns as an owner that put in $100M does."

Rodrigo says crowdfunding also benefits a hotel beyond the initial investment. Investors in a crowdfunded hotel project will stay there, hold their conferences and events there, and recommend it to everyone they know, as they want the hotel to be successful. They'll also likely be loyal to a specific hotel brand if it has locations elsewhere. (Above is AKA Wall Street; the brand is also found in DC, Philly, LA, and London.) While many investors are domestic, crowdfunding also offers a chance for international investors to stick a foot in prime markets and assets. "If you're from Argentina or Italy with $100k, that once limited you to buying a condo in Tampa," he says. Rodrigo is looking for projects in other major markets, like DC and Chicago. When not crowdfunding, you can find him spending time with his wife and three kids or running along Manhattan's West Side Highway.

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