Real estate crowdfunding platform CityFunders lets investors take advantage of New York City’s lucrative real estate investment opportunities. Instead of millions of dollars, investors can have skin in the NYC real estate game for as little at $5,000 per share.
Benzinga spoke with CityFunders co-founder and CEO, Dave Behin, about the platform and how it works.
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Benzinga: What type of real estate investments does the CityFunders platform offer?
Dave Behin: Investments are either debt of real estate in New York City, or the equity component of that real estate.
We seek solid real estate investments throughout New York City. Our team focuses on either originating first debt, or mezzanine debt, for businesses out there who are doing real estate transactions.
BZ: How about an example?
DB: As an example of a debt deal, we provided the mezzanine portion of the acquisition zone for a building on Mott Street in New York City.
The building had many under-market rents, and the business plan of the purchaser is to tear out the rents by cleaning up the building, buying out some tenants, bringing those rents to market and stabilizing the building.
BZ: What do you mean by “stabilize?”
DB: It can get confusing. When you stabilize a building, essentially, you've achieved your business plan.
So, if you buy a building that has, let's say, $200K in rental and you bring it up to $500K in rental by bringing up all the rent, after expending some capital expenses, you've stabilized the building.
BZ: How is an equity deal different from a debt deal in real estate?
DB: On equity, you're coming in on the sponsor side and not the lender side.
The returns are greater, but it's also a bit of a riskier investment. So, for that risk, you're also paid more.
BZ: What’s an example of an equity deal?
DB: That's the other deal we have on the platform. That deal is close to 380 thousand square feet of new development in Long Island City, Queens.
Long Island City is one of those neighborhoods that, over the past maybe about 10–12 years has been dramatically on the rise.
We've invested $2.7 million of equity into this project, and we are selling off a million of that to the crowd.
BZ: So, only a portion of total debt is sold to CityFunders investors?
DB: Yeah, on our secured yields, we're always selling $1 million of each yield that we have.
We're a startup. We figured we’d start with $1 million each, and then on the next one, start breaking more and more of it.