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Micro-investment firms aim to attract more investors to real estate

By Mike Wheatley | February 21, 2020

Many consumers have never been able to get into the real estate investing game simply because of the amount of capital required, but an emerging “micro-investing” trend is changing that, enabling a new wave of eager investors to get into the game with minimal sums of cash.

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In some cases, micro-investment opportunities exist for as little as $5, Yahoo Finance reported.

“The best portfolios are diversified, and real estate performs very uniquely, in a way that is uncorrelated to the stock market and bonds… We want to offer the same asset at a lower price point,” Janine Yorio, founder and CEO of Compound, a real estate micro-investment startup offering an app that allows micro-investors to purchase shares of properties the company hopes to sell at a profit for investors.

Micro investment firms such as Compound follow a business model that’s similar to investment trusts, offering investors the chance to become a part-owner of a property.

“REITs are just like owning stock, subject to stock market volatility and other unrelated factors to the actual performance of a property,” said Darren Powderly, co-founder of CrowdStreet Inc., a micro-investment company that allows investors to buy shares of commercial real estate nationwide. “So in addition to REITs, savvy individual investors add private real estate to their portfolios for greater diversification and returns.”

Compound says it intends to raise $10 billion a year for its investors, using that cash to invest in properties for its portfolio. The company has so far raised just $2 million, and is offering its first investors a chance to buy a hare of a luxury apartment in Miami Beach’s “Billionaire Bunker” island for just $260. Compound said the plan is to hold onto the properties for three to five years, and then sell them on for a profit and distribute whatever gains are made to its investors.

“We’re looking to give people access to properties they would want to own for themselves and are proud to say they own a part of—but that also makes a great long-term investment,” Yorio told Yahoo Finance.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
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