The CEO of Arbor Realty Trust, a Uniondale real estate investment trust, Thursday announced the launch of an online real estate crowdfunding business.
ArborCrowd is an online platform offering accredited investors the opportunity to make equity investments in individual properties, said Ivan Kaufman, who will also serve as chief executive of the new venture. Accredited investors include individuals who have earned more than $200,000 annually for the past two years or whose individual or combined net worth with a spouse exceeds $1 million, according to federal regulations.
“To a large extent, individual investors who are not active operators of real estate don’t have the opportunity to be able to invest into real estate,” Kaufman said. Typically, he said, property investors put their money into funds that back large portfolios, leaving many investors unaware of where their money is going.
“When you invest in a REIT, you’re investing in an entity that manages and controls various investments. The transparency on an individual piece of real estate is not there,” he said. “What ArborCrowd is allowing the investor to do is evaluate each specific investment on its own.”
Real estate investment trusts, or REITs, must return at least 90 percent of profits to investors. Some REITs, such as Arbor Realty Trust, are publicly traded. Unlike other REITs that buy properties and collect rental revenue, Arbor Realty Trust specializes in short-term loans for commercial properties.
The first investment offered by the new platform is a three-building, 79-unit multifamily portfolio in Brooklyn that will undergo interior renovations. ArborCrowd is seeking to raise $4 million in equity investments. Minimum investments for the property are $25,000.
Kaufman’s son Adam is managing director of the new venture, which will specialize in multifamily residential properties.
“Our goal is to have a deal a month for the first three months,” said the younger Kaufman. “At the end of the day, it’s about the quality of the asset.”
The crowdfunding business will operate independently of Ivan Kaufman’s other real estate companies, which include Arbor Realty Trust and Arbor Commercial Mortgage.