Startup opens real estate crowdfunding platform
A startup has launched a digital marketplace for real estate investors to crowdfund projects.
Loquidity in Grand Rapids said this week that it has opened its crowdfunding platform for Midwest projects, specializing in multi-family and commercial properties.
Loquidity is co-founded by CEO Jesse Clem and COO Joseph Elias. The partners are Michigan natives, and each has more than 15 years of work experience: Clem in IT for Fortune 500 companies and Elias with Fortune 50 companies in real estate.
"We understand the real estate markets in this region better than anyone," Clem said. "With a strong jobs market, a rebounding manufacturing sector and a thriving property market, the Midwest is becoming a prime target for real estate investors in the U.S. and internationally.”
“A lot of people have overlooked the Midwest when searching for quality real estate assets,” Elias said. “In reality, our deals represent an incredible value to investors as the employment rate and other economic variables improve. We also anticipate strong interest from native Midwesterners who want to help bolster their communities while realizing a financial return.”
Loquidity, a combination of the words local and liquidity, is designed to be an “inclusive” platform for delivering “exclusive returns” to accredited investors.
“It’s taking the middle men out, streamlining it all into one place,” said Evelyn Cashen, a spokesperson for Loquidity.
Loquidity, which exists due to the enablement of the 2012 JOBS Act, uses the accreditation company Crowdentials to verify investors, while Loquidity also checks up on the sources, Elias said.
Loquidity has about 60 investors on the platform since its launch last month.
Clem added that Loquidity believes its projects will offer “stable, risk-adjusted yields for our investors, with significant potential for capital appreciation."
Elias said Loquidity charges to the project, not the investor, an upfront acquisition fee of 1 to 2 percent of the purchase price and an asset-management fee against revenue of 1.5 to 3 percent monthly.
“Since we don't operate as a broker dealer, these fees are significantly less than would be otherwise,” Elias said.
Elias added that Loquidity’s structure will hopefully cast a wider investor net, attracting more than just experienced real estate investors to be involved with deals, but also any type of local investor, especially those who are looking to be more of passively involved.
“It’s an opportunity for people who hesitated, because it was too active of an investment,” Elias said. “They can now do it as a passive investment. This is an opportunity for everybody to involved in it. Money’s money, and we want people to take advantage.”
As part of its launch, Loquidity features a 72-unit multi-family property, at 1630 Leonard St NE.
Loquidity said the property represents a $3.4-million equity deal, with the goal of $1.4 million being raised on the platform.
The project will only be funded if at least $985,000 is committed by October 30, the project page says.
The minimum investment in the project is $5,000.
A Midwest idea
Elias and Clem met at the Ross School of Business at the University of Michigan.
As their careers took off, the two college buddies saw how real estate crowdfunding was being used on the East and West coasts, but not in the Midwest.
Since crowdfunding can be used to test market fundability, they decided to give it a shot in their home region, which is brimming with great real estate opportunities.
Elias said the creation of capital access and investment could be hugely positive for the Grand Rapids market, which is already well established as a good place to buy, sell and live.
“You have Grand Angels, Start Garden, a couple other revenues, but I think here you’ll have a lot more growth and development if there’s a lot more access to capital,” Elias said. “I think Grand Rapids would take full advantage of that.
“West Michigan right now has some of the highest occupancy rate when it comes to multi-family. Grand Rapids is considered one of the hottest cities for growth. When you have all these great marketers of job growth . . . that gets a lot more people living in Grand Rapids, working in Grand Rapids, and real estate is scarce, so the opportunities will continue to grow.”