Democratizing Real Estate Investment
- May 07, 2018
Online real estate investment is still in its early stages, but that doesn’t stop entrepreneurs from getting creative and setting up new instruments for those interested in adding this type of income to their balance sheets. StraightUp is an online real estate equity platform that enables accredited investors to deploy capital into one or more of New York’s residential development opportunities. Launched in February, StraightUp aims to make real estate investment a more democratic process, according to Omer Amsel, the platform’s co-founder & COO.
Describe StraightUp and how it distinguishes itself from similar real estate investment platforms.
Amsel: StraightUp is a new asset class which, for the first time, empowers ability to diversify into high-growth urban real estate, investing alongside successful developers, with access at the moment of peak opportunity. No other platform can deliver these three essential benefits.
We have skin in every deal. Other platforms are essentially middlemen who aggregate deals in which they have no stake. We are directly invested in each offering.
Local wisdom. We know Manhattan inside and out, and that’s where our first offerings are. Other platforms are run by financial or technology people, not a team with real estate DNA.
Transparency. Since investors are de facto our partners, we treat them as such, providing full transparency every step of the way.
What kind of opportunities are you offering investors?
Amsel: We focus on real estate development projects. Investors participate in the pre-construction phase, while the permitting process has already begun, which mitigates some of the risks involved with these types of projects. Obviously, these investments are not risk-free and should be carefully considered.
Which markets do you focus on, and why?
Amsel: We focus on the top 30 metropolitan statistical areas in general and, more specifically, in Manhattan currently. Our goal is to democratize the playing field that has been dominated by a combination of institutions and ultra-high net worth individuals, who have hogged access to high-profile deals.
When deciding when and where to deploy capital, which key factors should investors consider?
Amsel: It would be reckless for me to give specific investment advice, so I’ll focus on the right principles:
- Invest in a way that reflects your personality and risk tolerance. You should definitely feel comfortable investing in the asset class of your choosing.
- Knowledge in the sector. Look for investments in something that you understand, so you can push, prod and provoke. Don’t treat your investments like a black box that is impenetrable to you.
- Obviously, make sure you trust the company you invest with. We know that trust is earned by practice, not by words or pixels on a page, so we work every day to deliver transparency and honesty in our agreements and communication.
Throughout the investment process, what rules and regulations have you encountered, and why are they important?
Amsel: Where do I start? As you can imagine there are regulations on almost any step in the investment flow. We welcome these regulations, though. They help protect investors. Everything has to go through a legal review process, starting with how you formalize the investment details through what your messaging and content say. Our model generally works within existing regulatory parameters—unlike, say, Airbnb—so it was not that challenging.
While regulations keep some bad apples at bay, clever people with the wrong intent can get around them. We advise any investor to conduct individual due diligence, ask questions and consult with professionals.
Any market predictions for 2018?
Amsel: Rising interest rates will probably have an impact on home buyers and we might see a slowdown of overall real estate transaction volume. At the same time, as a result of the tax cut, millions of people are seeing more money in their paychecks, so they can afford some upward interest rate pressure.
We will continue to see a dramatic movement of Baby Boomers from the suburbs to urban areas— especially Manhattan—which will keep prices strong. Having said that, people have to live somewhere, so we might see an upward trend in rental volume, taking into account that this doesn’t necessarily mean a bump in rental prices—it’s a matter of supply and demand.
I think that markets which have been strong will remain strong this year, showing their resilience in the face of capital markets volatility.
Image courtesy of StraightUp