For decades, commercial real estate investment was a privilege reserved for investors with tight ties to brokers or real estate entrepreneurs. Prevented from soliciting capital easily because of restrictive securities laws, these entrepreneurs, called sponsors, raised money to buy or build property by creating a real estate syndicate of investors willing to pool capital. Qualified investors without sponsor connections were unable to invest directly in commercial real estate deals, leaving opaque options such as Real Estate Investment Trusts (REITs) or real estate funds as their only alternatives.
That changed in 2012, when the Jumpstart Our Business Startups (JOBS) Act gave rise to crowdfunding. Crowdfunding allowed real estate sponsors to bypass financial regulations and solicit capital online, giving them access to a much wider audience of potential investors. People who had never considered commercial real estate could now put as little as $10,000 to work in deals of varying quality in regions across the country.
Today, the marketplace continues to evolve. Investors expect crowdfunding’s convenience, but they also want access to thoroughly vetted, institutional-grade opportunities with stronger cash flow and reduced volatility. Here’s how we could fit into your decision to enter this asset class.
What is crowdfunded real estate, and how is Cadre different?
Crowdfunded real estate helps sponsors build a syndicate of investors using an online platform or marketplace. Sponsors post real estate opportunities and accredited investors can choose among deals happening throughout the country.
As a potential investor, prepare to spend a significant amount of time performing due diligence – especially if you are new to commercial real estate. That’s because many crowdfunded deals are lightly vetted by third parties that are not associated with the crowdfunding platform or marketplace. Instead, the platform acts as an intermediary. And the platform owner may not have a personal interest in seeing every published opportunity turn a profit.
Pay special attention if a sponsor-underwritten, volume-based deal promises an exit value that seems too good to be true. It’s unlikely that the crowdfunding marketplace owner invested his or her own capital in every deal published on the platform or took the time to rigorously analyze them. The marketplace may not guarantee the accuracy of the research, either – especially if a third party performed due diligence.
(Learn more about realistic returns and informed investing in today’s competitive environment.)
Our platform combines the convenience of online investing inherent in “traditional crowdfunding” with a few important advantages:
- Because we have balance sheet capital, we’re able to fully commit to deals, building credibility in the marketplace.
- We perform our own thorough due diligence on every opportunity we offer, and we share these details because we are committed to providing investors with deal-level transparency.
- By co-investing in every deal we close on our platform, we have a vested interest in properties that produce strong returns – for our investors, employees, and ourselves.
Our direct-investment business model provides deal-level transparency and thorough due diligence that includes projections, planned improvements, and information about prospective tenants. If you’re less interested in investing in specific properties but like commercial real estate and institutional-grade deal flow, you can opt to open a managed account instead.
Begin investing in commercial real estate
Cadre provides accredited investors with access to institutional-quality private real estate. To learn more about building your real estate portfolio or to become an investor, please request access to our platform.
(This article was updated in November 2019)
The views expressed above are presented only for educational and informational purposes and are subject to change in the future. No specific securities or services are being promoted or offered herein.
This communication is not to be construed as investment, tax, or legal advice in relation to the relevant subject matter; investors must seek their own legal or other professional advice.
Performance Not Guaranteed
Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are not guaranteed and may not reflect actual future performance.
Risk of Loss
All securities involve a high degree of risk and may result in partial or total loss of your investment.
Liquidity Not Guaranteed
Investments offered by Cadre are illiquid and there is never any guarantee that you will be able to exit your investments on the Secondary Market or at what price an exit (if any) will be achieved.
Not a Public Exchange
The Cadre Secondary Market is NOT a stock exchange or public securities exchange, there is no guarantee of liquidity and no guarantee that the Cadre Secondary Market will continue to operate or remain available to investors.
Opportunity Zones Disclosure
Any discussion regarding “Opportunity Zones” — including the viability of recycling proceeds from a sale or buyout — is based on advice received regarding the interpretation of provisions of the Tax Cut and Jobs Act of 2017 (the “Jobs Act”) and relevant guidances, including, among other things, two sets of proposed regulations and the final regulations issued by the IRS and Treasury Department in December of 2019. A number of unanswered questions still exist and various uncertainties remain as to the interpretation of the Jobs Act and the rules related to Opportunity Zones investments. We cannot predict what impact, if any, additional guidance, including future legislation, administrative rulings, or court decisions will have and there is risk that any investment marketed as an Opportunity Zone investment will not qualify for, and investors will not realize the benefits they expect from, an Opportunity Zone investment. We also cannot guarantee any specific benefit or outcome of any investment made in reliance upon the above.
Cadre makes no representations, express or implied, regarding the accuracy or completeness of this information, and the reader accepts all risks in relying on the above information for any purpose whatsoever. Any actual transactions described herein are for illustrative purposes only and, unless otherwise stated in the presentation, are presented as of underwriting and may not be indicative of actual performance. Transactions presented may have been selected based on a number of factors such as asset type, geography, or transaction date, among others. Certain information presented or relied upon in this presentation may have been obtained from third-party sources believed to be reliable, however, we do not guarantee the accuracy, completeness or fairness of the information presented.