Advantages, disadvantages, costs and more • Benzinga
Who is CityVest?
It’s no secret that real estate investing has helped countless investors build wealth over time. However, even in the context of real estate investments, the categories differ. Buying a single family home or a single investment property and selling it after it appreciates is basically the first level.
The top tier includes income-generating investment properties or real estate investment trusts (REITs) that use investor money to purchase large portfolios of rental properties. At the top of the food chain are large institutional funds that can generate double-digit annual returns.
Historically, the 6 and 7 figure buy-ins required by most institutional funds have kept small investors from entering the club. This is where CityVest comes in. It has a unique economic model which aims to broaden investors’ access to the most sought-after institutional funds by adopting an innovative approach to crowdfunding of real estate investments.
How does CityVest work?
CityVest combines the best aspects of real estate crowdfunding, institutional investing and online real estate platforms into 1 high performance investment machine. Much like the old mousetrap, the beauty of the CityVest business model is its simplicity. Its founders realized that the only thing stopping thousands of mid-sized investors from buying into successful institutional funds was massive minimum investment requirements.
This situation created a conundrum for both funds and potential investors. With more money, institutional funds could buy more trades, but their trades are so cash-hungry that setting a buy-in of $ 25,000 or $ 50,000 would raise funds too slowly for them to do. ‘they can never start new projects. CityVest solves this problem by combining bundles of investor money until it reaches the minimum threshold for institutional investments.
CityVest investors do not actually invest in the funds themselves, but rather buy into a management entity managed by CityVest. The CityVest management entity then invests these funds in property development opportunities and carefully considered property offers. Once these funds generate income, they are distributed to CityVest investors on a quarterly basis.
This plan creates a win-win situation for investors and developers. Investors in CityVest can benefit from the double-digit annual returns that can come from well-controlled and performing real estate funds. Developers get a new source of funding as CityVest opens its development opportunities to a whole new class of investors.
CityVest investors pay an annual fee which is typically less than 1% of their total investment. In addition, CityVest charges a nominal annual administrative fee to cover the cost of running the website, meeting federal reporting and other logistical requirements. Finally, accounting and administrative costs related to individual investments are reimbursed to CityVest before investors receive net dividends. All in all, this is a fairly reasonable fee structure.
CityVest is remarkably easy to use. Signing up is as easy as 1, 2, 3, and when it’s done, investors are taken to a user-friendly “Investor Dashboard” where they can browse active trades, search for new ones, and print their account information. , all with the click of a mouse.
In addition, CityVest’s contact details (phone and email address) are prominently displayed on the investor dashboard. The top of the dashboard also contains quick scroll links to educational resources and active offers seeking funding.
The individual investments page describes the basics (e.g. minimum investment, expected rate of return, type of fund) in an easy-to-read manner. Once you click on an investment that interests you, you are taken to a full investment overview section. Overall, this well-designed website is both user-friendly and easy to navigate.
The key section that sets CityVest apart from all other online investment markets – its Due Diligence section. CityVest employs a third party due diligence company named Buttonwood that provides a detailed due diligence report on each investment opportunity so that CityVest investors have greater confidence and reduce risk.
Due diligence reports provide verification of several critical aspects of an investment manager, such as confirmation that the investment manager has key man life insurance; the manager has invested a certain minimum amount invested in his own fund (skin-in-the-game); check the SEC, FINRA and social media for adverse reports; and of course, background checks for bankruptcy, lawsuits and liens.
CityVest has a strong investor education section that provides a wealth of information on real estate investing. The first section is a wonderful letter from the CEO of the company, Alan Donenfield, explaining how he came to be involved in real estate. Also included is an excellent Frequently Asked Questions section which admirably answers basic “how, what, when and why” questions investors may have.
By clicking on the “Real estate investment” tab, users access a CityVest Education and Articles section. Here, investors find plenty of articles, charts, and resources designed to explain the benefits of real estate investing and why they should invest with CityVest.
Perhaps the best section here is the “Learn Real Estate” tab, which is an introduction to real estate investing for new investors. Investor education topics also include lessons on interesting topics, including:
- How real estate transactions are financed
- Real estate investment risks
- Understanding Real Estate Interest Rates
- Real estate investment strategy
Overall, CityVest’s customer education section is strong, but not spectacular. It has all the information an investor might need in article form, but does not use Zoom lessons or webinars, which would definitely be a more user-friendly option.
However, there is no lack of quality information at all. He even publishes a daily investor conference call with the CEO. Additionally, someone who is completely new to real estate investing might go through CityVest’s client education section and walk away with a solid understanding of the fundamentals of how real estate investing works, how it is financed, and how. whose investors make money.
CityVest definitely has a solid customer support setup. After signing up, you not only receive the simple ‘Welcome to CityVest email’, but also a personal follow-up call from a CityVest representative to see how they can answer your questions or assist you through the process. .
Email inquiries are responded to promptly and it is clear that CityVest is firmly committed to customer support. Maybe the only thing missing here is a live chat option on the front page. That said, it’s obvious that CityVest investors (or potential investors) won’t be left alone in the woods, and that’s what’s important.
When it comes to any online investment platform, the quality of the offerings is the meat and the potatoes. Without a doubt, CityVest shines the most here. CityVest offers high-quality investment offerings that promise the kind of Internal Rate of Return (IRR) and quarterly payments that make investors’ mouth water.
While many CityVest offers are closed at the time of writing, the current open opportunity is a workforce housing fund operating on the California-Nevada border with a targeted IRR of 13% to 18% and a buy-in of $ 25,000. Normally, accessing this kind of fund would cost hundreds of thousands, if not millions of dollars.
The only reason more CityVest offers are not available is that most of them have met their fundraising targets, which only underscores the quality and timeliness of CityVest offers. A sample of deals made reveals incredibly diverse investment offerings, ranging from equity funds that manage commercial or residential real estate to debt-based funds backed by mortgages.
All CityVest offerings are verified by a third party due diligence company, and the investment overview includes this report, historical performance data of the fund itself and any other document related to the fund. CityVest’s high level of transparency speaks volumes about the quality of its investment offerings and the confidence CityVest has in presenting them to investors.
The multi-million dollar overall size of each access fund allows CityVest to negotiate better investment terms than other million dollar investors in these funds. CityVest Access Funds are able to earn a 4% higher preferential return with lower fees.
After the catchphrase that all investments carry a risk of loss, the next caveat in investing is that past performance is no guarantee of future results. This is as true for CityVest offers as it is for anyone else. CityVest states on its website that “your investment involves substantial risks, including risks to the value of the property at the time of its liquidation”. That said, CityVest only targets funds that have the potential to generate an IRR of 20% or more. Before being selected, these funds are put to the test by CityVest’s management team and then audited by its third-party due diligence firm.
Additionally, investors can view the past performance of all CityVest offerings by clicking on their preferred individual investment and reviewing the fund’s history. All of this means for investors that they can be confident that the pro forma figures of any CityVest prospectus have a high probability of being reached, meaning they can look forward to a reliable quarterly dividend.
CityVest is a comprehensive and well-designed effort to bridge the financial gap between accredited investors and the best high performance institutional funds. What makes the whole thing even better is CityVest’s incredibly strict due diligence and commitment to transparency. The whole platform harmonizes perfectly with an attractive and functional website and additional bonuses like daily conference calls with the CEO of CityVest. All things considered, if you are an accredited investor looking for passive income or an opportunity to diversify your portfolio, CityVest deserves a close review.