By Roland Murphy for Arizona Builder’s Exchange
Sometimes you come across a story that’s really something groundbreaking, interesting and that has the potential to be a game changer in important areas you cover.
Most long-time reporters will tell you there are two great sources of frustration in doing their job. The first is trying to pry information out of people and institutions that don’t want it to come out.
The second is having a story like this and having to sit on it until all the pieces and players are aligned.
This week, Neighborhood Ventures, Arizona’s first crowdfunding real estate company, has announced its formation and launch in the Phoenix area. We’ve known about this for a several weeks and wanted to be the first to break the story, but that could have gummed up the works, and we felt the potential this new effort brings to the marketplace was important enough to stay mum for a while.
According to the announcement scheduled for today, Oct. 10, “The company allows all Arizona residents the opportunity to be shareholders in apartment projects in the Phoenix area.”
Neighborhood Ventures was formed by John Kobierowski, a 25-year-plus multifamily veteran who is also Sr. Managing Partner at ABI Multifamily, and former Goldman Sachs tech analyst Jamison Manwaring.
Thomas M. Brophy, Neighborhood Ventures’ director of research, and a market analyst whose research is regularly reported on in AZBEX, said, “Never has there been a better time to invest in multifamily real estate then now. Rental housing has entered its most significant growth period in a generation, fueled, in large part, by monumental demographic changes at both ends of the age spectrum. These changes will continue to propel the industry for years to come.”
In an AZBEX email exchange, Brophy explained the uniqueness of the Neighborhood Ventures approach. “(This) is Arizona’s first, exclusively multifamily, crowdfunding platform and asset management firm. Our first property to be funded will go live in November in Tempe, with a few more coming online after that. It’s also helpful to note, we’re not just the listing platform but we’re also the sponsor of the deal and run everything A-to-Z.”
Unlike traditional investment programs, which require participants to put up significant capital, Neighborhood Ventures’ approach is intended to generate expanded appeal and lower barriers to entry. Brophy said, “Whereas a lot of platforms only accept accredited investors or $10K-plus minimum investments or both, Neighborhood Ventures starts at $1K minimum investment and is open to all Arizona-based residents. Additionally, we’re an equity-only firm meaning we do not encumber our properties with debt and the rental income received is passed through and distributed to individual investors based on ownership percentage.
Commenting exclusively to AZBEX, Kobierowski wrote about the company’s plan saying, “Part of our collective experience is seeing the effects that debt can have on the performance of an asset. With crowdfunding, we plan to raise all necessary funds through equity partners, which will lower the risk of our investments because there is no debt involved.”
Manwaring, stated, “Crowdfunding platforms like Kickstarter have given entrepreneurs a large audience to showcase and fund new technologies. Platforms like GoFundMe have transformed how donations for charitable causes can be raised quickly online. Neighborhood Ventures is excited to take crowdfunding to commercial real estate to allow every Arizona resident the opportunity to own a portion of an apartment project within their neighborhood.”
In a supplemental statement provided exclusively to AZBEX, Manwaring added, “Real estate is one of the best investments available. Crowdfunding laws have opened up commercial real estate investing to everyone, not just the wealthy. We believe multi-family is poised to have a strong run over the next several years and also believe that this is the right asset to open up to a broad group of investors.”
New Venture, New Digs
In other news, we recently learned Neighborhood Ventures will be operating out of The Grid, a space ABI Multifamily is developing as a roughly $3M adaptive reuse project north of 7th Street and Camelback in Phoenix. In addition to ABI Multifamily’s headquarters and Neighborhood Ventures’ base of operations, the location is planned as a co-work and real estate incubation space.
ABI Multifamily is the owner. Corgan is the architect, and Alexander Building Company is the general contractor. Completion is planned for April of next year.
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