Crowfunding for Real Estate In Canada

9 Replies

I know that this site (biggerpockets.com) is mainly for the US but I hope I can catch some interest. Actually, though I am from Canada I don't feel like the US is another country in some ways as both countries are on the same continent. Toronto and Vancouver's markets are as hot and as expensive as New York and San Francisco. The markets are overpriced but homes do sell quickly.

In terms of crowdfunding systems, I have seen "deals" where there is a low entry point for people to invest their money (as low as $1000 - at least in the US). In return, the investors get a certain percentage back (10% in some cases) after say 1 year - kind of like a GIC but with a much better return. I believe this would be considered debt financing but with the equity as security.

My first question is if anyone knows if a crowdfunding system exists for the market in Canada (as I sure would like to use it).

My second question is how I can get the financing for vacant land and to get funds for building the home? Could the same system be used? (Crowdfunding?) I would have to purchase the land and then get the financing for the build which I hope I could get all at once. I see an opportunity to buy land which is relatively inexpensive in the big city markets, build something and make a fairly good profit margin (30% to 50% if not more than I put into it). Thank you.

Note: Not asking for a Mentor, lenders, etc. Please point me in the right direction... I need advice! :-)

I should add that I would like to start off small with single family homes.  Ideally I want to:

1. Buy the land in one of the big cities (Toronto is my first target).

2. Build the property with the help of general contractor.

3. Sell the property.

4. Restart the process again each year or sooner - depending on how big the projects become in the future.

My hope is to find investors who will get to know me, trust me and we make it happen!  

Again, advice only !  I have to follow the rules here! :-)  I just want to know how I can make this a reality.

@Darryl C.

Crowd funding in general, and for real estate in particular, has been kept tied-down here in Canada.  Unless there have been very recent changes, the few opportunities you will find are for Accredited Investors only.

I agree Roy.  I am having a hard time finding information on it which is what prompted me to post on the forum here.  Few opportunities indeed.  Perhaps I should focus my efforts south of the border. Thanks for your take on it.

@Darryl C.

Crowdfunding is not popular in Canada.. I looked into this a few years back and even read books on it.. All I can tell you there is a few guys or companies who use Crowdfunding for developments in Ontario.. And there were Meet ups in downtown Toronto.. 

If you want to delve into this yourself I would recommend going to those meets up are at least partner with someone who has done it before..  there are a few regulations involved..  but I remember one condition of an investor would be they needed an X amount of net worth.. can't remember the number and very competent in investing..  just my 2 cents.. sorry I can't really give specifics but this is all I can remember  

Good luck..

I don't have any experience with crowd funding so I'll leave that out. Wondering how far you had gotten with your plan of buying land, building and selling at a 30-50% profit? Those just seem like incredible margins especially in the big cities. Especially with all the new regulations coming in January.

@Hai Loc

Yes, I concur. Crowdfunding in general is not popular here in Canada (at least from what I have looked into).  I have been considering meet ups in the GTA.  Meeting people and making connections may help me towards my goal.  Some investment clubs have conditions like what a member's net worth would be or they want a certain amount invested in projects they have within their clubs.  Personally, I would like to do debt financing with the promise of giving back the money lended plus a percentage back (i.e. promissory note; private loan agreement), though I may have to consider an equity arrangement.  Thank you for your advice.  Going to meet ups is a good idea.

@ Leona N.

I haven't gotten far yet.  That said, it will take some time.  If I can just get one project done, I will repeat the process.  The margins are high indeed.  I have ran a few scenarios.   Aside from permits, real estate fees, commissions, taxes, etc. (which do add up - don't get me wrong), it will mainly depend on the purchase price of the land, what it is zoned for and what the cost will be of what can be built on it.   Vacant land prices are relatively inexpensive compared to existing building structures including ones that need to be renovated.

As for the new rules coming in place, it just makes it that much harder to get financing from say... banks.  I believe in turn, that will drive people to other sources of financing.  I am not sure if that is good or not but I believe the purpose is to keep the price of homes from increasing.  We have already seen a slow down in the market (at least in Toronto).  

If you have any ideas of where to get financing, I am all ears. :-)

Thank you.

@Darryl C. , if you private message me, I'll put you in touch with my go-to for Canadian crowdfunding information. He knows how it works, and he's creative enough to find ways to legally do things. There's more flexibility in this space, in Canada, than most people know, due to changes over the past two years.

My guy's name is:

Hitesh Rathod, CFA
CEO
NexusCrowd

@Claude Boiron

Thank you for your offer!  I will definitely send you a private message.

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