Crowdfunding investment in the property market

© Robert Byron 123RF.com

The financial sector is no different, and a company called Wealth Migrate plans to use fintech to tap into the extremely lucrative global property market, worth about US$13,6trn.

Property crowd funding

The approach the company has taken is an exchange traded property crowd funded share. Through a standalone entity and managed by a board, it will list multiple, single or small groups of property assets that will be legally ring fenced from each other.

“This means it’s not a blended portfolio, fund or a real estate investment trust. This is a direct property investment in a direct property, which is ring fenced. “

“So the investors know exactly what they are investing in. the investment property is purchased and registered in a property holding company, established for the transaction.That company/property will not be liable for other properties or companies’ debt or liabilities,” says Hilda Lunderstedt, CEO Wealth Migrate SA.

According to the company, property crowd funding investors will be able to trade their shares in the regulated exchange environment with the benefit of transparent price discovery and market depth for the first time.

Put simply, what investors are buying is a listed share. This provides them with the enhanced levels of scrutiny and regulation associated with a listed company, but also the ability to trade their shares on the secondary market with proper price discovery and transparency.

How it works

“This is no different to if two friends buy into a direct property together. The investment provides the same returns through a combination of rental returns and capital growth. The only difference is that technology allows us to do this at scale.”

“They are investing in property via a listed share, trading on the Trop-X. This provide investors with enhanced levels of scrutiny and regulations based on the performance of the underlying property, investors will earn a proportional dividend and or quarterly income,” she says.

The same type of opportunity as Donald Trump

For now, the minimum investment will be US$10,000 or £10,000 in commercial or residential opportunities in the UK, Australia and the USA –which at R144,560 and R47,930 respectively at the current exchange rate – is probably not amounts the average South African has lying around.

“Typically, we require a minimum investment of $10,000 but through Wealth Migrate PCC Limited, investors will now have the opportunity to invest in property for as little as US$100. For a 100 investors, there will be the opportunity to invest from $100,” Lunderstedt explains

“With time, as the platform and technology are being developed, there will ultimately be true democratisation where a Masai warrior in Africa, a single mother in China or a rickshaw driver in India, through their mobile phone, will be able to simply and safely invest with US$1 in the same type of opportunity in New York, which was previously only available to Donald Trump and his friends.”

Looking for emerging market investors

Many are wary of financial markets and are seeking the safety of fixed income and direct real estate, but what Wealth Migrate is most interested and focused on are the hundreds of millions or billions of investors who are based in the emerging markets who want to have wealth preservation, safety and peace of mind of investing in direct real estate in the first world.

So how do investors know that what they are buying is the real deal, and not some dud?

“Firstly we offer buyers trips to see the properties. Secondly we offer digital buyers trips where they get a virtual inspection of the property. And thirdly they can look and see that the properties exist on the registers,” she comments