Tag: wikipedia

Explained: The Pros & Cons of Real Estate Crowdfunding

by Ayman A.

Hark the (re)emergence of the Real Estate Crowdfunding Platform.

Real Estate Crowdfunding isn’t new. The concept’s been around for over a decade. Although now it’s enjoying a re-birth during this age of post-pandemic excess liquidity.

Let’s start at the beginning.

What is Real Estate Crowfunding? It’s the ability for retail investors (Mr or Mrs Smith) to invest nominal sums towards a direct real estate asset acquisition, via a platform that manages the transaction, the financing, and the asset, in exchange for a fee.

In plain English, ‘Invest in property for as little as $500‘.

These soundbites may sound sexy, but they’re often misleading. So together let’s take a closer look at the Pros and Cons of real estate crowdfunding:

The Pros – Why to crowdfund a real estate investment?

Access All Areas

The biggest benefit of real estate crowdfunding is access to dealflow.

Some years back I participated in a crowdfunded acquisition of a commercial property on London’s Oxford Street. The deal proposed that investors would earn an income yield of 2.15% (net of fees) and an IRR of 13% from the value uplift that was explained within the investment pitch. It was a 4-hear hold. I’ll tell you how it went, further down this article.

Point is, the deal was fully subscribed. Investors like me, who’d have never otherwise had the chance to participate in an Oxford Street commercial property acquisition, piled in. Access.

Small Tickets to Big Plays

Real estate is traditionally a very lumpy asset class. It takes a large amount of capital to buy a property, and ties up that money for the duration of your holding period.

Crowdfunding real estate can be done with small tickets. Enabling investors to participate in big real estate investment plays, without needing to have, or indeed lock-up, large sums of equity for long periods of time.

Liquidity – Getting your money out.

Direct real estate ownership is when you directly own a property in your name. Like your house.

Crowdfunding real estate is not direct asset ownership. It’s indirect. You will own shares in companies that are set up to buy and own the properties directly. Those shares can be sold to the other shareholders of the company, or to third party investors, via the crowdfunding platform’s internal marketplace, without the need to sell the property. Making your ability to get your money out, easier. More liquid.

Diversification

Crowdfunding investors can distribute their capital across an array of property types and sectors. That’s investment theory 101. Spread risk out strategically, across a diversified range of properties. Instead of putting equity into a residential rental investment.

Invest across a basket of residential, commercial, and retail properties. Each with their own economic and tactical opportunities.

The Cons – Why not to real estate crowdfund?

Fees

Where direct real estate investment puts you in the driver’s seat. Indirect crowdfunded investment leaves you, the retail investor, reliant on the platform you’re investing through, to manage your investment and the property. They’re putting this deal together from beginning to end. And they’re going to charge a fee.

Whether they charge a stack of them; like a sourcing fee, an admin fee, an early-exit fee, or a carry… Or they roll their remuneration into a single, seemingly innocuous ‘Administrative’ fee. The platform you’re investing through is clipping a slice of your investment for themselves, before you see a penny.

Illiquidity

Promoting crowdfunded real estate platforms on the basis of their liquidity sounds nice in theory. You’ll be told you can sell your shares in the company that owns the property, fast. And get your money out with little administrative hassle. But read the fine print.

  1. There might be a minimum lock-in period during which you can’t exit your capital.
  2. It’s not uncommon for a crowdfunding platform to demand the right of first refusal to buy your shares. Not a bad thing, but it won’t pay full value for them.
  3. Often the platform will give themselves the authority to approve (or reject) any buyer for your shares that you might find on the secondary market.

Any one of these conditions, creates illiquidity. So read up on your chosen platform’s T&C’s. Know your rights.

The Unspoken Upside

Here’s the dirty little secret that crowdfunding platforms don’t want you to hear.

Before it can offer a property to its crowd of investors, a platform needs to source and secure it.

To do that, the platform either buys the property outright and flips it to the crowd. Or locks in the right to buy it at a price, then secures the crowd funding for it, at a higher price.

In both cases there’s a markup. A delta, between the price the platform secures the property for, and the price it pitches it to its crowd at.

That difference is an upfront upside, that the platform keeps for itself. It’s an immediate profit that’s coming out of your investment’s bottom line. An ethical crowdfunding platform should declare the property’s true acquisition price, source a deal for its crowd at no profit, and justifiably charge a sourcing fee for its troubles.

Beware of any platform that does not declare the true purchase price of its properties to its crowd. Especially if they’re also charging a sourcing fee. Big red flag. 🟥

The Waterfall

Remember that deal on London’s Oxford Street that I invested in years back? The one that promised a 13% IRR? Guess what ended up happening with it.

The distribution of returns didn’t play out as the platform had proposed in their pitch.

The pitch was based on a rental income uplift to be gained, from a lease renewal that was due during the investment holding period. That renewal ran into trouble. Negotiations between the property manager and tenant dragged out. Lawyers got involved. Legal fees skyrocketed. The platform didn’t distribute dividends as they’d promised. After 4 years, what was supposed to have been an IRR of 13% ended up closer to 7%.

This despite all the ‘professional’ opinions (from lawyers, property professionals etc..) that the pitch had cited at the start.

The sting in the tail is that when you’re a retail investor, sh*t falls down. It’s not the platform that’s at the bottom of the totem pole. It’s you.

The platform’s banked its upfront upside. It’s been paid all its administrative fees. All it’s got to lose is its carry fee. That’s the fee they get if things go as well as, or even better than planned. Think of it like a performance bonus.

The platform’s banked its upfront upside. It’s been paid all its administrative fees. All it’s got to lose is its carry fee. That’s the fee they get if things go as well as, or even better than planned. Think of it like a performance bonus.

But let’s face it. Things don’t always go to plan. And when it hits the fan, the only one losing…is you. Because here’s the thing about being an indirect, retail investor. You’re too small to matter. In the cascading waterfall of profit distribution, you’re last in the queue.

Let’s Wrap This Up

So, is real estate crowdfunding a good investment?

If you want to diversify your portfolio. Get in on property deals you otherwise can’t access. Put smalls sums of capital to work. Then sure. Give it a go.

BUT…read up. Know who you’re investing through and the conditions of your investment. Be aware that the platform you’re investing through is carrying little or no risk on the trade. And that they will make more profit from your money, than you will.

overwrite.ai | the AI writing assistant for estate agents | Sign up for your Free 7 Day Trial.

For informative and light-hearted news and views on the world of real estate, follow overwrite.ai on Instagram and LinkedIn, and keep up-to-date with our weekly NewsBites blog.

This Negotiation Tactic Will Fail You

by Ayman A.

Every business person knows that feeling of putting time into negotiating deals. The art of convincing a counterparty. The excitement of getting a deal to its final stage. The elation of success. The celebration.

But success isn’t always the outcome. In fact, more often than not, deals fall flat in a heap of disappointment and wasted time.

And this one negotiating tactic that many people mistakenly use, is almost always guaranteed to throw their deal from the outset.

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What Is an AI Writing Assistant and How Can it Help Me?

by Charlotte C.

AI-driven writing tools are becoming a widespread phenomenon.

An AI writing assistant is software that automates the writing of one or more phases in the process of generating content for marketing purposes. AI writing assistants help with ideation, structure and even tone and style, giving marketers more time to focus on their unique skills and to brainstorm new ideas.

Due to its wide range of capabilities, an AI writing assistant can potentially make marketers’ jobs easier: It can generate content at scale while also making sure that every post has the right tone and structure according to client specifications. In addition, it can also take care of error-prone tasks such as copy editing

Many copywriters are now using AI writers to create content because software can identify the best structure and vocabulary to use, which can be a time-consuming process for copywriters. It also helps them with writer’s block by giving them new ideas on what they should write about.

AI writers are also much cheaper than human copywriters and can generate content at scale. This is thanks to their ability to learn from large sets of data and perform efficiently.

How to find the right AI assistant for your needs

So how do you know which one AI assistant is right for your business? To start, you want to think about what kind of content you need. Do you need data-rich articles with keyword-rich titles that can rank well on search engines? If so, then an automated content creator that specializes in SEO is ideal.

Alternatively, if you’re looking for something more creative and less technical, then an AI writing assistant that specializes in creative writing or emotive content may be perfect for your needs.

There are also AI assistants that specialize in designing infographics or editing video scripts.

The importance of AI in various industries

The emergence of AI has changed the way we do business. It does away with the need for human intervention in many cases, which means that there is no need for staffing and management of huge teams to handle customer service issues. For example, AI-assisted call centers can manage support tickets with accuracy and speed without requiring human labor all day long.

We will start seeing more jobs being replaced by AI as it becomes more advanced, so it’s important now to look at how AI can be used for better productivity.

Ways AI can supercharge your productivity

The way you use AI is going to depend on what your business is and what you plan to do with it. When you’re starting a startup or a company, AI can be incredibly useful. It can provide you with insights into who your target audience is and how they’re going to react to certain changes in your product or service offerings.

To work on a project, you need to have a good idea of what you want to do. In some cases, this may be as simple as just listing all of your ideas and then going from there. In other cases, it may be more difficult. That is where AI can come in ⁠— the software will help you find the best idea for your project and help you with your workflow.

In reality, AI is already impacting businesses today. The main question is not what AI can do for a business, but rather how a business can leverage AI to improve customer experience and increase profitability. AI assistants are on the rise and they have been used for a variety of tasks from content generating to automatic translation. As more companies start using these technologies, they will change the way we work and live.

This column does not necessarily reflect the opinion of OVERWRITE.ai and its owners.

Yakup Özkardes-Cheung writing for Entrepreneur, February 26, 2022.

This story has been published from an online news feed without modifications to the text. Only the headline and has been changed.

overwrite.ai is an artificially intelligent content creator helping real estate agents write unique, search optimised property descriptions that sell homes.

For informative and light-hearted news and views on the world of real estate, follow overwrite.ai on Instagram and LinkedIn, and keep up-to-date with our weekly NewsBites blog.

How to earn that Million-Dollar Commission Cheque

by Charlotte C.

What does it take to become a top real estate agent?  

There’s no denying the profession is relentless; with extreme working hours, emotional roller-coasters, short-weekends, and no guaranteed income. Estate agents must be prepared, sometimes through no fault of their own, for deals to crumble at the last minute.

So, it’s no exaggeration that many of the world’s top brokers eat, sleep and breathe real estate.   

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London’s smallest microflat sells for 80% above asking price

by Ayman A.

LONDON. Love it or hate it. It’s the world’s Capital city, and everyone knows it.

Last week a 7-square metre (75-sqft) microflat in a Victorian Conversion in Lower Clapton, east London, sold at auction for 80% above it’s minimum listing price.

The property packs in a bed, storage cupboard, a wash basin, a microwave under the pillow, and a wet-room with a showerhead above the toilet.

It’s believed to be the capital’s smallest ever property. Smaller than most domestic helper’s rooms in the average Dubai home.

The space between the bed and the wall is wide-enough for an average arm-span, and it comes with a foldout table for eating or working on.

But you can forget about cooking. There’s no stove included.

Just don’t say ‘mould’

This bolthole in a box, has been rented for £800/month (US$ 1,080) to a tenant who lives elsewhere and uses it as their London pied-a-terre for one or two nights a week.

It went to auction listed at £50,000, and yet it sold for a whopping £90,000 (US$ 121,000). That’s nearly half a million Dirhams!

Despite an 80% excess bid, the investor that bagged it is banking a +10% gross yield, meaning they can expect payback within 10 years.

Microproperties like this represent a growing trend of tiny homes in dense metropolises, where space constraints and labour shortages are tightening supply, forcing rents and prices to increase.

Typically London’s developers would convert flats into rooms. Now the socioeconomics of demand have pulled a 180. Developers, ever in tune, are transforming rooms, however small, into flats.

Is this a red flag, marking an asset price bubble that’s about to pop?

Share your opinion in the comments below.

Mi casa su casa

overwrite.ai is an AI-assisted content creator that helps real estate agents instantly curate unique and search-optimised property marketing descriptions. 

For informative and light-hearted news and views on the world of real estate, follow overwrite.ai on Instagram and LinkedIn, and keep up-to-date with our weekly NewsBites blog.

The Real Estate Animal Kingdom

by Charlotte C.

Like a pride of lions, your reputation, and that of your Agency, are intertwined. And in the Real Estate Animal Kingdom, only the strongest survive. 

It’s no secret. Your industry is more challenging now, than ever. The potential for massive earnings and the low barriers to entry, are leading to increasing competition.

Greater compliance oversight. Rising portal charges. Interest rate hikes. These are all very real challenges that demand your continuous evolution.

Here’s the bottom line. Estate Agents are pack animals, not lone wolves. Every Agent is bound to an Agency, and must work together to market themselves and their properties. But what if your marketing department is failing YOU?

Hunting Together

To survive, indeed to thrive, you must hunt together. You will only ever be as strong as the brand you represent. How that brand markets itself, and markets you, is critical to your success. So ask yourself, “Is the brand I work for doing everything possible to support me?”

Continuous evolution. I said it before. I’ll say it again. If your agency’s marketing team aren’t doing enough to have your back in this cut-throat animal kingdom, you die. If they stand still, falling prey to the complacency of how they do things, you die. If they are not leveraging the latest technologies, guess what? You die.

Your marketing team has got to be top-notch. If they’re scrimping on budgets, or out of touch with tech, they’re no good to you. A weak link in your chain. Impeding your earning potential.

Animal Rights

It’s your right to query anything that could impede or enhance your income. If they’re not on their game, they’re taking you down a road to nowhere. Pure and simple.

You need to know where your marketing department’s budget is being spent. And what that’s getting you in return.

Here are 5 questions that all Estate Agents must be asking their marketing departments in 2022:

  1. What international and local best practices are baked into your marketing strategy?
  2. Are you originating tactics to distinguish us from our competition, or just copying what others do?
  3. Do you consciously try to drive traffic to our website, and not just portals? How? What are the results?
  4. How do you ensure that the quality of content we, and our brand, publicly associate our names with, is always of the highest standard?
  5. For each marketing dollar you spend, what is our ROI? (Tip: Nothing less than 300% should suffice)

A Little Tip

The easiest way to know whether your marketing team’s thinking of your best interest, is if they’ve subscribed to overwrite.ai for you. If not, get them to without further delay. Only then will you understand what you’ve been missing.

overwrite.ai is an AI-assisted content creator that helps real estate agents instantly curate unique and search-optimised property marketing descriptions. 

For informative and light-hearted news and views on the world of real estate, follow overwrite.ai on Instagram and LinkedIn, and keep up-to-date with our weekly NewsBites blog.

Social Media Content Hacks for Estate Agents

by Charlotte C.

You’re a good estate agent. You work for a decent agency. Built a rep for yourself. Bank a respectable commission cheque each month. You’ve got a presence on social media. Found yourself a catchy handle. You look good on camera. You post; a lot. You get a few hits. A handful of likes. Usually from friends or colleagues. But you’re not crushing it. Not really getting traction with the people you want traction from. So what’s holding you back?…CONTENT!

We’ve all had writer’s block. When it’s on the tip of our tongue but we don’t know how to articulate it. Or worse. When our mind goes blank, suddenly having no clue about the kind of content our potential clients might find interesting.

So we’ve made things easy for you.

Here are 6 of the most trending real estate agent blog ideas, that’ll guarantee to deliver high-quality content to your readers and blow up your online following.

#1 Mind Your Business

Do you know what effect inflation’s going to have on home prices? What will an increase in tax rates do to demand?

Irrespective whether you are in leasing or sales, a great place to start with informative content is to talk about topics such as the latest behavioural trends, interest rates, regulatory policies, or the interplay between demand and supply. If you don’t understand the basic rules of real estate economics, you can’t give your audience quality advice. That makes you obsolete.

Be relevant instead. Educate yourself, in order to educate your clients. It’s all about adding value.

#2 What’s On

Get miles of traction discussing local events. Keep your blog updated with What’s On in your local community. From community shows to festivals, charity events to estate oriented sales programmes, your readers would love to know the goings-on in their locality. 

#3 What’s Hot and What’s Not

Do you know a great place to hang out with friends and have a yummy burger? Or, perhaps the best coffee shop? You also might know the go-to happy hour spot. Your audience will not only love the list of cool places to check out but also appreciate your insights. 

#4 Pet-Lover’s Paradise

It is often difficult for pet parents to find the best places to take their furry friends. Whether it is a pet groomer or a pet-friendly restaurant you talk about, this is a great topic to engage with your pet-loving readers. So, grab a list of places that let felines, canines, and any other nines, in and add those recommendations to your blog. 

#5 Kid-Friendly Zone

Residents usually love exclusive information about places that are great for kids. Be it a perfect pizza joint or a school with all the amenities, giving parents the themed information is an excellent way of marketing your website. The content is likely to be shared on social media platforms as well. 

#6 Get Personal

Who said real estate agent website content couldn’t be personal? You can share your story of how you grew into an agent. Why should people trust you? How did your journey in the real estate arena get started? What have you learned in your years as a real estate agent, an entrepreneur, and an investor? 

A real estate blog is one of the most effective ways of creating an online relationship with your clients, building credibility with informative content, and generating potential new leads. The more useful the content, the more people will return, engage and share your content.

So if you’re looking for inspiration that’ll take your next (or first) post up a few notches, this is your starting point.

Happy Blogging!

overwrite.ai is an AI-assisted content creator that helps real estate agents instantly curate unique and search-optimised property marketing descriptions. 

For informative and light-hearted news and views on the world of real estate, follow overwrite.ai on Instagram and LinkedIn, and keep up-to-date with our weekly NewsBites blog.

Neckties and Ice Cream

by Ayman A.

Once upon a time there was a rookie salesman who, like many others, was preoccupied with the brand of car he drove. How crisp his shirt was. How straight the cut of his suit. How spotless his shoes. And how perfect the knot on his necktie.

One day he was running late for a client meeting. So he stopped to buy ice creams for the client’s children.

100,000 hours later, he met the same client again.

“You bought us ice creams” the now teenage children recalled, as their parents looked on, smiling.

There was no mention of the necktie he’d worn.

100,000 hours of more sales experience, didn’t create that client connection. Nor did all the neat shirts, shiny shoes and tailored suits.

That impulse of grabbing ice creams for a pair of children he hardly knew, did.

More Mileage Please

Your career gets more mileage from your genuine acts of kindness, than from all the Teslas you can buy.

overwrite.ai is an AI-assisted content creator that helps real estate agents instantly curate unique and search-optimised property marketing descriptions. 

For informative and light-hearted news and views on the world of real estate, follow overwrite.ai on Instagram and LinkedIn, and keep up-to-date with our weekly NewsBites blog.

2022: A Year Estate Agents Will Either Love, or Fear

by Charlotte C.

Last year was a watershed for estate agents the world over. Records tumbled month after month, as many of you banked commission cheques most had only dreamed of.

A decade of quantitative easing, low interest rates, and pandemic-era government stimuli have made real estate, typically an illiquid asset class, more liquid than ever before.

With homes on the market for days rather than months, bidding wars became front-page news. It’s been in-sane!

There are no guarantees that these good times will continue. With inflation already exceeding central banks’ expectations in many developed economies, there is a very real risk of markets turning around.

Even if you’re not concerned with worst case scenarios, have a look at what some real estate thought leaders predict will be crucial for success in 2022:

Continue reading “2022: A Year Estate Agents Will Either Love, or Fear”

The Mad Reality of Metaverse Realty

by Ayman A.

I’ve been busy buying real estate. One day back in mid-December, I acquired four prime residential downtown Manhattan plots of land. Since then I’ve made two unsuccessful bids to acquire an adjoining fifth plot. Together they would complete a super-prime land parcel.

Continue reading “The Mad Reality of Metaverse Realty”