Want to invest in real estate, but you either can’t afford it, or don’t want to spend the time and effort to manage it?
To solve this problem, real estate crowdfunding companies were born.
addy (with a lower case a!) is one of these such companies. Let’s take a look in this addy Invest review to see if it’s any good.
Real Estate Investment Company
Addy is a prop-tech startup that enables Canadians to invest in real estate for as little as $1.
- Minimum $1 investment means that you can invest regardless of your budget
- User-friendly platform
- Transparent and clear information on investment opportunities
- addy co-invests into properties themselves, which can give you confidence about the quality of the properties
- No hidden fees – just the annual $25 membership fee
- Maximum $1500 on investments into a single property
- A potential seven-day wait on having access to your transferred funds
What is addy?
addy is a real estate crowdfunding technology company based in Vancouver, British Columbia.
With a vision of “real estate for everyone”, they aim to break down the barriers associated with homeownership, whether that is difficulty affording the rising property prices, high risk, maintenance, or the headaches of becoming a landlord.
Crowdfunding is a more hands-off and lower-risk alternative to buying your own property on the market. In places such as Vancouver and Toronto, where home prices have risen significantly over the last decade, addy offers everyday investors a great chance to become a homeowner without a mortgage.
As a company, they also recognize that quality real estate is becoming less and less accessible to many Canadians.
Rather than helping the rich get richer, they give everyone else the opportunity to invest in real estate with an amount that fits their budget; no $50,000 down payments, mortgages, or renovation/flipping troubles are involved.
addy offers a variety of vetted Canadian properties to investors, who can then invest as little as $1 and as much as $1500 into a single property. Here is a breakdown of how it works:
- addy identifies a real estate property – they report that their chosen properties go through a strict due diligence process and are vetted by their real estate acquisitions team, investment committee and Board of Directors.
- addy divides the investment into units valued at $1 – when investing into real estate with addy, each “share” costs just $1 regardless of the property price. For instance, A $400,000 opportunity would have 400,000 units worth $1 each.
- addy sells the investment units – each unit costing $1, investors can buy up to 1500 units per property. Want to invest more? You can spread out your investments within several properties.
Once you have invested in a property with addy, you can make money in two ways: the selling of the property or the rental income.
For instance, when the property is sold, any appreciation that occurred due to a value-add is paid back to investors along with their investment principal.
Or, if the property is not sold but rented out to tenants (or already has tenants inside), the cash flow of rental payments is passed back to investors in the form of distributions.
All of the details of distributions and returns are outlined in the offering memorandum you will read before investing, so make sure you are comfortable with all of the terms before funding your addy wallet and investing in the property.
Do note that you must become a member before you can invest in the opportunities on addy’s website.
Like mentioned, do make sure that you carefully read the offering memorandum before investing and seek expert financial advice if you are unsure about your investment.
Although addy is quite transparent about their investment opportunities (see below), they do not replace financial advisors. If you would like, consider seeking external advice before investing.
What kind of properties is available with addy?
addy divides up their investment opportunities into four different categories; core, core plus, value-add, and opportunistic.
The physical characteristics of the building, along with the risk associated with the investment, are the two factors that determine an opportunity’s category. Here are the details on the four investment categories.
- Core (conservative risk, relatively lower return) – these properties usually require very little management from investors and have tenants with existing leases. They are simply held once they are acquired.
- Core-plus (low to moderate risk) – in core-plus properties, there is more room for growth. By making small property improvements, increasing the quality of the tenants, or managing the property in a more efficient way, these opportunities have low to moderate risk with medium returns.
- Value-Add (moderate to high risk) – these properties have little to no cash flow at the time of acquisition but have great potential once the value has been added. These opportunities are good for investors who are willing to take a higher risk and can wait a little bit longer to see returns on their investment.
- Opportunistic (high risk) – whether it’s land acquisition, new development, or an empty building, Opportunistic properties have the highest risk profile and require investors to wait three to four years to see returns on their investment. As such, they tend to have the highest returns. Like Value-Add investments, Opportunistic ones have no cash flow at the beginning of the project with tremendous room to grow.
Important note: as with any investment, returns on investments are not guaranteed. Everything is always estimated and is subject to market conditions.
Who can invest with addy?
In order to invest with addy, you must become a member. The annual fee for their regular Charter Membership is $25.
You can also become a Believer Member (a five-year membership) for $500 ($100 per year), which comes with advantages such as invite-only investment opportunities, access to Believer-only chat groups, and other perks.
It’s important to note that regardless of what kind of member you are with addy, this will be the only fee associated with your property investments. There are no commissions, transaction fees, or withdrawal fees with addy.
Currently, only Canadians in British Columbia, Ontario, and Alberta can invest. “Unlocking” other provinces are still on the way, as addy needs more members/interest in these provinces in order to start vetting property.
Interested in addy and not in one of these three provinces? Sign up here to show your interest so you can also get in on real estate crowdfunding.
Potential Downsides and Risks
While addy’s model presents an innovative solution to the barriers of traditional real estate investing, like all investments, there are inherent risks involved. Here are some potential downsides and risks to consider:
- Liquidity Concerns: Unlike stocks or bonds, real estate is not a liquid asset. If you need to cash out quickly, it might be challenging, especially if the property hasn’t been sold or if there isn’t an active secondary market for your shares.
- Market Volatility: Real estate markets can be unpredictable. Though Vancouver and Toronto have seen significant appreciation over the past decade, there’s no guarantee that this trend will continue indefinitely.
- Limited Control: As an investor, you have no direct control over property management decisions, property improvements, or the timing of the sale of a property.
- Caps on Investment: The maximum cap of $1500 per property means that if you are looking to make more substantial investments, you’d need to spread out your investments across multiple properties.
- Reliance on Platform: The success of your investment is partly contingent on the continued operation and good management of the addy platform itself.
addy makes money through their annual membership fees and returns on their investments. As mentioned earlier, there is an annual $25 membership fee if you are interested in investing with addy.
In addition, addy also invests in the properties they have available, making them co-owners with you on the opportunities you put money into (along with potentially hundreds of other Canadians), which have good returns just like yours.
This means that addy has just as much skin in the game, which can be a big reassurance for investors who can have more confidence that addy offers sound opportunities.
As mentioned, 100% of your investment goes into the property you invest in with addy; there are no transaction fees or commissions on the dividends you may get. Hence, no portion of your investment earnings makes up addy’s bottom line.
Yes, addy Invest is a legitimate company and really does offer real estate investments for as low as $1. addy operates under the National Instrument 45-106F, which is governed by securities commissions across Canada.
addy strives to break down barriers to homeownership. They know that just a few people could easily buy an entire property, leaving no chance for anyone else to get in on the market. With the cap, addy’s offerings remain accessible to everyone, even those with just $10 to invest.
A REIT is a real estate investment trust, and addy is not one of them.
A REIT is not only a broker, but by investing through them investors put their money into a collection of properties (usually unknown ones) rather than a single one.
This is not the case with addy, as investors invest in a single, known property each time. addy is also not a broker; they invest in known properties right alongside you as an investor.
No! Your annual membership fee gives you access to invest in all the available properties in a given year.
You can cancel your membership anytime you wish, and your existing investments will not be affected (you just will not be able to invest in any more addy properties). If left alone, your membership will automatically renew each year.
You can become a member of addy on their website. Click on the “join now” button, enter your information, and fund your addy wallet (this is where your membership fee will be taken out of and where you have to transfer your money before investing it).
Once you fund your addy wallet, you can start investing almost right away. Charter members (those with the regular, $25 annual membership) have instant access to $500 of their deposits in their addy wallet, so they can start to invest up to that amount right at the time of signing up if they like.
The rest of the funds in their wallet will be available after seven days. Believer members, on the other hand, have instant access to $1500 in their addy wallets.
addy is giving Canadians a chance to get in on real estate without the headaches, all while working towards good returns, reducing barriers, and increasing accessibility.
If you didn’t think you would have the chance to invest in real estate, things might be able to change with addy. If you’re looking for more tips on investing your hard-earned cash, you can head to the investment section of my website, where I dive further into all types of investments.