Crowd Source Funding Your Next Real Estate Purchase

Crowd Source Funding Your Next Real Estate Purchase


Jason Black and Gant HillJason:    Welcome back to another episode of the Louisville Custom Builder Podcast. Today, I have another special guest. Gant Hill is joining us once again. We talked a couple of weeks ago and he did such a great job and had some pretty interesting topics, I thought let’s bring him back and let’s talk about it. Gant, welcome back.

Gant:    Thank you for having me.

Jason:    One of the things we talked about, or you alluded to on that last episode was a different type of funding on some real estate projects, and it was, I believe you said, crowd funding? Can you expand upon that a little bit and tell listeners what that is and maybe how they can get involved in it and take it from there.

Gant:    In today’s environment, people do want to invest in real estate, but they often don’t have $100,000 or $1 million to put down on a property. It’s oftentimes complicated to finance, and there’s just a lot involved in the acquisition of property. The investment opportunities that come through real estate are often desired in that, like a stock, it can be worth zero at some point. Real estate always will have value. It’s also something that people can drive up to and touch. What we have been working on, and we’re still trying to perfect the model, but we have done it, is working on investment vehicles that allow a larger number of people to invest smaller sums of money into property that they have an interest in, they care about, they can drive up to and see and feel and touch, but also generates a return to them.

Jason:    It would be like instead of buying a couple of shares of Apple stock, maybe there’s a local bar or pub or maybe it’s a raw piece of land on a corner that you and your buddies could put up some money and possibly buy. Is that what you’re saying?

Gant:    Yes.

Jason:    Do you get a typical bank as a partner or do you just do all the funding through individuals, or is it a mix?

Gant:    The times that we’ve been involved in this form of raising capital is we just treat it as they’re investors that come to the table and they’re usually people that share the vision that we have for the property that we’re working to invest in. We oftentimes will use bank financing, but we will use the crowd funding opportunity as a way to raise the money that we would need to put down on a property and raise working capital while a property is currently going through zoning changes or build-out, et cetera.

Jason:    That is interesting, because real estate is a great investment opportunity, but sometimes you do need a lot of money. This sounds like a great opportunity for folks to get involved. If somebody was interested in getting involved, how would they go about it? Are you the expert? Who would they contact?

Gant:    We’re certainly trying to develop what’s known as a platform where we’re a moderating organization that can help facilitate this, but we’re not 100% there yet. We’re not ready to take orders, but we have done it in the past and it has been successful. When I’ve done it in the past, I’ve been working with people that I generally know and share a similar vision for a property in the community and what we want as an investment.

Jason:    Say I’ve got a couple of buddies I went to college with and we’ve always talked about doing a stock club or something like that, but we’ve never been able to do it. If we got together and got some money together, would we …? Maybe we don’t have a certain project. Could we come to you and maybe you could help us find that project?

Gant:    Yes. We’d certainly be able to help you with that. Oftentimes we invest as well, so we’re always happy to be, as I mentioned, a moderating organization, but we have to be careful because there is a point at which this becomes a security and we stay away from that. We do have people that work with us that do maintain the proper credentials to be a security, but we are trying not to be that at this moment in time.

Jason:    Would this be more or less somebody buying a 4-plex of apartments? Would it be more of a commercial avenue where somebody might buy a location, build a restaurant, try to find a tenant? How do you see this?

Gant:    I see it as all the above. We are focused more on trying to find people that share the vision for the property and for the area, for the neighborhood. A lot of times it’s just people that live in the neighborhood that want to invest in the neighborhood but don’t want to own it directly.

Jason:    It may be too early to tell, and I guess every project is going to be different, is there any way to put I guess a number on what type of return somebody could expect? Or is the goal of this is just to get folks to diversify and be able to put money in something that they can actually touch and feel?

Gant:    We all want the properties to have a return, and a good return at that if we run them properly, but we can’t guarantee it. For me, at this juncture it’s more fun than it is meant to be a way to diversify the retirement savings. We will hope to achieve a very good return and we are working towards that, but as far as returns are concerned, this is more of a community involvement opportunity as much as it is an opportunity to realize an appreciation of your investment.

Jason:    Okay. I guess maybe the approach I would take is maybe … You always hear location, location, location is what good real estate is all about, so maybe a focus on finding good locations, good real estate. Obviously, you’re not going to win the lottery, it’s not going to be something you’re going to get rich quick, but, again, it’s just a good way to diversify, maybe do something with some colleagues you really enjoy.

Gant:    I’d like to expand upon this one bit. I’ve got some amazing partners in one of my first projects that we’ve done. To me, they represent what we want, and we came together because we shared a passion for a certain part of town. Not one of us wanted to own the property ourselves, but we all wanted to own it together. Once we came together to buy the property, we went and crowd-sourced it and came up with another 4 or 5 people that had a few dollars to put in.

I’ll mention who they are. Alex Frommeyer, who is the founder of Beam Technologies, probably one of the most recognizable young entrepreneurs in our community. He’s also now living in Columbus, Ohio, and his lovely girlfriend, Amelia Gandara, who was with FirstBuild and now is with the Enterprise Corporation of GLI, along with Dayna Neumann and several other entrepreneurs in our community. It’s just been wonderful because no one is betting the ranch on this opportunity, but we want to be a part of something special and this is a way that we can do it. We’re hoping to raise more money and buy more property.

Jason:    I think it’s a fantastic idea, Gant, and I think our listeners are very interested. I get approached all the time by people about wanting to invest in what I do. I didn’t know what to tell them. I never had an avenue or an outlet like the crowd source funding that you talk about. The next time somebody comes to me, definitely your name will come to mind and maybe we’ll grab lunch because I myself am very fascinated by this as well.

Gant:    Thank you. I’m excited about it, and we’re just getting started.

Jason:    Yeah, and I look forward… I know you talked a little bit about your first project with some of your partners and you alluded to what you are working through. Maybe as time goes on, we’ll get to see some of that project come to fruition and could be another episode.

Gant, thanks again for joining us today. Really appreciate your view on the market. It’s always a little bit different in a good way and just give people a way to diversify their investment portfolio. Thanks again for joining us, and everyone have a great day.

Gant:    Thank you.