Want to buy a house without a down payment? “Partial ownership” may be tickets

Want to buy a house without a down payment? “Partial ownership” may be tickets

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House prices in Canada are stratosphere The two companies are providing Canadians with a way to participate in the action.

It is called partial ownership, and it allows individuals to purchase shares in an independent house, apartment building, or industrial park.

Vancouver-based startups Addy and Toronto-based BuyProperly are part of the emerging “financial technology” and “real estate technology” industries that are using technology to disrupt the financial and real estate industries.

Devine ReviewAssociate Professor of Real Estate at the Schulich School of Business at York University said that the industry “the time is ripe for disruption because we have been operating in the same way for a long time.”

She believes that fractional ownership may be very attractive to Gen Z and young millennials.

Experts say that the concept of partial ownership opens up a new way to participate in real estate by reducing costs-but there are also potential problems.

How does it work?

The sales promotion of partial ownership is that even if you don’t have a down payment for the house or can’t fund the shopping mall, you can register and pay for your investment through Electronic Funds Transfer (EFT) with just a few clicks, and you can become part of the property By.

Eddie with Buy correctly The essence is to attract investors online to crowdfund the purchase of real estate.

The focus of BuyProperly is to sell shares in rental housing in Ontario. Addy handles properties valued at USD 5-50 million, such as apartment buildings and industrial parks, and currently has investments in British Columbia, Alberta and Ontario.

Mike Stephenson is the CEO of Addy, a real estate investment company based in Vancouver. He said that partial ownership is for Canadians who want to own real estate but cannot buy it themselves. (Ben Nilms/Canadian Broadcasting Corporation)

Both offer a small amount of investment property inventory on their websites and said they are looking for more.

in Australia, India with we, The company offers different partial ownership options—for example, a U.S. company sells farmland.

Addy and BuyProperly stated that they obtained regulatory approval to sell the investment and claimed that the transaction could be completed in less than 10 minutes.

Is it joint ownership or REIT?

The partial ownership model offered by these companies is not like co-ownership of houses or buildings because investors do not own or use the property. In addition, the number of shares sold in some investments tends to be much higher.

It is also different from a real estate investment trust (REIT) in that instead of investing in the stocks of a listed company with a large amount of income-generating properties, you invest in a single property.

How much does it cost and how much can I invest?

Every company has a different way of participating.

With Addy, the basic membership fee is $25 per year, and you can buy shares in real estate for as little as $1. The company sets the maximum amount that any single investor can invest in a single property at US$1,500.

“We are not built for the rich, we are built for 99% of Canadians who want to own some real estate,” said Mike Stephenson, CEO and co-founder of Addy. The company currently has 16,000 members, but not all of them have invested.

In BuyProperly, the minimum investment is US$2,500.

Khushboo Jha, CEO and founder of BuyProperly, said: “This is where we realize a sweet spot.” The amount of investment “is not trivial, it will not affect someone, and it will not be so high that you can’t do it.” “

The company does not sell memberships. Investors share the one-time purchase costs (such as house inspection and legal fees) and charge recurring fees for property maintenance and management. BuyProperly also charges them an annual fee of 2.5%, plus taxes and GST/HST on the investment amount.

Khushboo Jha is the CEO and founder of BuyProperly, a company headquartered in Toronto that provides people with the opportunity to buy shares in rental housing as an investment. Jha stands in front of a $2.2 million rental house in Mississauga, Ontario, which is jointly owned by the investor and her company. (Keith Whelan/Canadian Broadcasting Corporation)

So far, the company has 300 investors, and no one investor can own more than 50% of the houses. Jha said that most of their investors want to spread their funds across multiple properties.

How do you make money?

For each company, there are two main ways investors make money.

First, they get a certain percentage of rental income relative to investment.

Then, when the property is sold, the appreciation will be returned to the investors and they will also get back the principal of the investment. BuyProperly also allows investors to sell their shares to another investor in advance if they want to exit the property before the company sells.

Jamie Smith, a 35-year-old renter in Vancouver, invested in Addy because she felt the prices in her city were too high.

“If you want park benches here, I don’t know if we can afford them,” she said.

She and her partner recently invested a total of $1,500 in two Addy properties, and they plan to do more.

She found it beneficial to “choose the building I want to invest in” and added that for people who don’t have much to invest in, partial ownership is a “good” choice.

“It feels like a very capable process,” Smith said, and he found that trying to buy a place to live was “just the opposite.”

Dangers and disadvantages

In fact, real estate in many parts of Canada seems to have only appreciated in value, but this does not mean that partial ownership is risk-free.

“When the situation is good, it will be beneficial to you. But when the situation is bad, there will be risks involved,” said Lale Samalbach, Associate Professor of Finance, Ted Rogers School of Management, Ryerson University.

Laleh Samarbakhsh of Toronto’s Ted Rogers School of Management pointed out that properties owned by a group of scattered investors could depreciate like any other property. (Samnar/CBC)

She pointed out that real estate owned by a group of scattered investors could depreciate like any other real estate. She also said that real estate is not always easy to liquidate, which may force owners to wait for a return or accept less money when they need to sell.

She said that one concern for the entire real estate industry is that as partial ownership brings more people, prices may become more inflated.

Samarbakhsh acknowledged that fractional ownership can be exciting and attractive, but warned that investment decisions should not be based on the fear of being left behind.

“You have to be very careful,” she said.



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