Individual investors who have become increasingly comfortable with lending and investing online now have a chance to invest in commercial real estate loans alongside institutional investors.
EquityMultiple CEO Charles Clinton, above, tells us his company makes real estate accessible to new investors by providing pre-vetted opportunities with clear information about each deal, low investment minimums and a variety of deals to allow diversification. EquityMultiple is an online real estate investment marketplace developed in partnership with Mission Capital Advisors. And this week, the group stepped into the debt market, offering investors the chance to help fund a pre-development bridge loan for a San Francisco mixed-use development.
The first investment of its kind from EquityMultiple will give investors access to Urban Green Investments' $3.4M pre-development loan to Butterfly Investments. Butterfly Investments purchased the development site at 1490 Ocean Ave (shown above) for $5.3M and plans to build 15 condos, ground-floor retail and parking on the site. Investors with as little as $5k can invest in the loan at an annual return of 9% net interest over a nine-month term.
Charles tells us debt investments are easier to understand for those without extensive real estate experience (unlike the structure of some equity investments). Everyone is familiar with earning interest and appreciates getting regular distributions, he says. And, because each loan is secured by a mortgage on the property, it improves the risk profile, he tells us.
San Francisco's job growth, which has driven the demand for housing, and the property's location on Ocean Avenue make the Butterfly Investments project a great opportunity for EquityMultiple to step into the debt space, Charles says. The firm gives investors a way to build a diversified real estate portfolio the same way they would build a stock portfolio and investors range from first-time real estate investors to real estate industry leaders.
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