Diversify your portfolio with tangible properties with no minimum investment requirement
Since 2013, developers and syndicators have raised billions of dollars through real estate crowdfunding, but only a small portion has flowed into the industrial sector, until now.
Real estate crowdfunding is a relatively new industry. The term may seem confusing to some, but it actually just provides a platform for a large amount of people to invest in real estate syndications, typically online.
A Chicago area industrial real estate syndicator, Brit Properties, has launched several new offerings including a new fund which features a crowdfunding campaign. Brit is providing easy access to savvy investors who have their sights set on industrial property investments. Brit welcomes new investments for virtually any dollar amount. There is no minimum.
Chicago area industrial is in high demand
The industrial market is currently booming because companies that manufacture and distribute products form the backbone of the U.S. economy. As a result, developers, institutional investors, and wealthy families are clamoring for industrial properties located in large population centers like the Chicago area.
Chicago’s popularity with investors is due to its strategic location with about 20,000 industrial tenants occupying over a billion square feet of space. Notably, Chicago area properties offer more lucrative capitalization rates– the calculation that determines investment yield– compared to investments in the largest markets on the east and west coasts.
“The rich are getting richer in Chicago industrial real estate,” says Eric Schneider of Brit Properties. But, how can you, as an individual, own a piece of this financially lucrative pie?
Democratization of real estate investing
Here’s how: Brit is inviting both new and seasoned investors to join their new fund. “We focus on industrial properties– which is different from most other crowdfunding syndicators who offer investments in residential, office, and retail real estate,” Schneider says. “We are filling the industrial void.”
Schneider continues, “investors can immediately jump into the industrial sector with us to earn cash flow yield and profits. Brit’s most recent investment is generating cash flow distributions of 8%”
Brit plans to acquire up to $50 million of small and midsize properties. The new fund will include over 100 investors. Brit’s new fund is glad to welcome new investors, even for a small amount, to get them started. The fund’s objective is to buy properties that are diamonds in the rough that can be repositioned for success.
Track record of experienced sponsorship
Crowdfunding is not new for Brit Properties. Last year, Schneider and Brit principal Joel Friedland, successfully crowdfunded an individual property in a Chicago suburb. Until then, for over 30 years, they had only invited friends, clients, and colleagues to participate in their investment opportunities. Brit and its affiliates have acquired roughly 90 industrial properties with privately pooled funding from over 200 investors, many of whom are individuals and families.
Their tenants range from national companies such as Comcast, AT&T, the U.S. Postal Service, and the non-profit Feed My Starving Children, to Element Bars, a successful locally owned protein bar manufacturer who appeared on Season 1 of the hit TV show, Shark Tank.
“We believe that a key element in the success of real estate investing is having a strong balance sheet with plenty of cash reserves. This enhances our staying-power and helps us, and our investors, sleep better at night. ”
— Joel Friedland
Liquidity in private real estate investments is usually limited
While most private real estate syndications do not offer liquidity, Brit Properties is different. Brit has successfully arranged for investors to cash-out by facilitating the sales of partnership interests from one investor to another. Brit’s principals expect to further enhance opportunities for a quick liquidity off-ramp with an increased number of investors.
Friedland learned lessons the hard way
Anyone who is sophisticated in real estate investing knows that some deals work out great and sometimes others do not. Friedland, now 61, acquired his first building in 1989. “We’ve had many strong winners, but too much bank debt nearly took us down during the Great Recession,” he says. Friedland laments “starting in 2008 we struggled– but we persevered with the help of our bankers who provided reasonable terms to restructure the challenging investments. Those were difficult times and I learned to be very thoughtful about debt ratios.”
Conservative leverage for a strong balance sheet
Today, Schneider and Friedland say that their loan to value ratios (LTV) are very conservative. Friedland states, “most of our properties have LTV’s of under 30% and at times we have actually invested debt-free.”
Friedland adds, “we believe that a key element in the success of real estate investing is having a strong balance sheet with plenty of cash reserves. This enhances our staying-power and helps us, and our investors, sleep better at night.”
Brit is seeking investors who share Schneider and Friedland’s doctrine that lower leverage translates to lower risk and preservation of invested capital. Friedland targets consistent returns for the long-run and says Brit’s investments are prepared to weather any future black swan event such as the economic crisis in 2008, and the COVID-19 Pandemic. He adds, “we strive to have the strongest balance sheets in the industry.”