- Good reputation in the property sector
- Detailed due diligence on investments before selling them
- Easy to understand online presentation of complicated investment information
- Access available just to approved investors
- High min. of $25k
- Investment mechanisms can be complicated, with other investment companies having the right to push for the sale of the asset.
- Principals have a considerable industry background, but the platform itself has a poor track record (only three of the previous agreements listed)
A lot of crowdfunding property investment platforms are tech firms (taught by the likes of Google and Uber), while others enter the marketplace as property developers applying tech to their expertise. This company is part of the latter group and is a fairly new name, founded by a prosperous cluster of existing CRE firms, counting in Arbor Realty Trust, Arbor Commercial Mortgage and AMAC, and founded on an outsourced platform (through CrowdStreet now).
Forms of Investment Provided by the Company
As of today, the firm's listings have counted in multi-family properties, apartment compounds and mixed-use structures, and are equity investments with a holding time of two to five years. ArborCrowd is offered just to approved investors, with a min. investment of USD 25k.
What You Get If You Invest with the Company?
You get a membership interest in an LLC made particularly for that investment. The LLC holds the interest in the real estate. With every investment you make via ArborCrowd, you will get a separate K1 at tax time to disclose your share of the profits earned by the LLC.
CRE's are dynamic, involving several interrelated organizations. Prospective investors need to ensure that the documents concerning the offer are checked in depth in order to comprehend the link between the LLC they invest in and the other entities which, when we're talking about this company, also counts in other property investment trusts operating as limited partners. Investors need to recognize the relative control rights of every party; for instance, in certain situations, other investment funds involved as equity owners can have the right to compel a sale.
How the Company Turns in Profits
The details change by investment, yet there is usually a combination of origination and annual charges paid by the LLC. Yields are usually shown net of these fees, but investors should be sure to check the offering documentation so that they are informed about the charges by the LLC in which they are investing.
Possible Yields and Cash Flow
The estimated return changes with each investment, but the company advertises yields around 12-20 percent. Unlike other sites, there is no clear requirement of quarterly or annual distributions – the distributions are at the absolute discretion of the LLC manager. The contract documents also set out the Capital Stack and the Waterfall, i.e. the order and proportion of the proceeds to be paid when the real estate is sold or refinanced.
Scope of Offerings
There is 1 available investment as of now, and since being established in 2016, ArborCrowd has provided 3 more real estate assets.
Regulatory Structure and Standards for Due Diligence
The company provides investments just to approved investors under SEC Reg D. They're not licensed brokers or investment advisors.
They highlight their position in curating and picking investments, but it would be good to see additional information behind traditional references to cash flow, local market metrics and sponsor efficiency. They do say that each offer has been checked by the firm's CEO – who has over three decades of experience.
Although the Platform's method should not be a replacement for your due diligence before any investment is made, it is a different method than some other Platforms providing similar investments that act more like marketplaces, providing limited curation.
ArborCrowd main features and highlights
- Real Estate Crowdfunding