Last Updated on May 31, 2021 by Yetty Akindele
Undoubtedly, investing in real estate is not an easy feat achievable by the average individual. This is perhaps due to the huge amount of capital this type of investment requires and the lack of access to quality real estate deals. This difficulty is the reason why addy exists- to make investing in real estate accessible for Canadians for as little as $1!
What is addy?
addy is a relatively new Canadian prop-tech company headquartered in Vancouver, BC. It is co-founded by seasoned entrepreneurs Stephen Jagger and Michael Stephenson who recognized a need to build a technologically robust online platform that will facilitate easy investment in real estate.
The company’s mission is to enable every human to be a homeowner through access to real estate investing in an amount that fits their budget.
In light of increasing cost of real estate brought about by the pandemic and the government’s response of printing more money, investing in real estate by way of property purchase seems more daunting.
However, addy with its low-cost investment option (min $1) has simplified investing in real estate without you having to make a huge sacrifice. In essence, you do not have to break the bank to invest in real estate. You can also diversify your investment portfolio rather than taking a huge risk by taking full ownership of a property.
How does addy work?
The principle guiding investing the addy way is through ‘crowdfunding’. In simple terms, real estate crowdfunding offers investors an opportunity to become part owners (shareholders) of a property by investing little amounts of money.
When I first heard of addy, I was intrigued and wondered how it was possible to invest in real estate other than REITS for as little as $1. So, I put on my research ‘hat’ and started to find out all I could about this company that has its tagline as ‘real estate for everyone’.
Here is what I found out about how addy works;
- addy identifies a real estate investment opportunity. A decision to proceed with the investment opportunity is made by a team of industry experts (addy’s acquisition team, investment committee and board of directors). All opportunities go through very rigorous due diligence process.
- The monetary value of the investment is broken out into equal units of $1. For example, a $300,000 opportunity will be divided into 300,000 units, where 1 unit equals $1.
- addy lists the property on their website and sells each unit for $1. Investors can decide how much they want to invest, from a minimum of $1 to $1500 per property.
How much does addy cost?
I have dealt with companies in the past who claimed a particular amount was the fee for their service only for me to purchase the product and discover that it had hidden costs in order for me to reap tangible benefits!
This is not the case with addy. There are no hidden costs…ever!
addy offers 2 paid membership plans. Other than these, addy charges no transaction fees, no property acquisition fees, no withdrawal fees, no promotion fees…nothing.
You need to choose a membership plan in order to gain access to the platform. addy’s membership is structured as follows;
- Charter Member- This membership is annual and gives you unlimited access to all properties as long as your membership is active. Signing up for this membership costs just $25 per annum.
- Believer Member- This plan gives you all of the same benefits as with the Charter membership. The key difference being that this membership is for you if you believe strongly in the future of addy. The plan allows you to lock in your membership for 5 years by paying a one-time fee of $500. Essentially, you will not be charged more than $500 for membership for a period of 5 years.
The 2 membership plans come with a 100% money-back guarantee if you are not satisfied with your addy experience at any time.
How do I make money with addy?
addy investments are long term investments, and could have an investment term of 3 to 7+ years. You must be comfortable putting your money in this sort of investment as it is not a get-rich-quick scheme.
While addy aims to remove the barrier to investing in real estate with their minimum investment amount of $1, you must also note that returns on investment is dependent on the capital invested. So, to realize tangible gains, the higher your investment amount the better.
Making money with addy is property dependent. The details of which can be found in the property’s Offering Memorandum (OM). However, it is generally in one of 2 ways which can be from;
- The sale of the property- In this case, the initial capital invested as well as any proceeds realized from the sale of the property is split amongst the investors.
- Rental income- If it is a rental property, excess rental income after expenses is divided amongst the property investors.
You should also note that annual distributions are also made if applicable. The offering memorandum for each property is pretty detailed and you should spend some time going through it prior to investing.
Is addy a REIT?
addy is NOT a REIT. With addy, you get to invest in an actual property with a physical address, you could even drive by it. You get to make the decision of whether you want to invest in any particular property that is listed. Additionally, you are a co-owner alongside addy. This is because the company also has a stake in the properties being listed for investment
REITs on the other hand allows investment in a basket of properties and is usually listed via a broker which addy is not.
Where is addy available?
As at the time of writing this post, addy is currently available to residents above the age of the majority in Alberta, British Columbia and Ontario. The company has plans to make its services available across all other Provinces in the near future.
How safe is addy?
One thing I noticed while signing up on the platform is that their security measures are really thorough. You go through an account creation phase and a verification of identity stage as well (submission of a government photo ID).
The Offering Memorandum is also very detailed enough to ensure you know what you are getting into prior to investing in any property. Additionally, like most investments, the returns stated in the offering Memorandum are estimates and addy does not guarantee returns.
In relation to investment risks, there is no investment that doesn’t carry some form of risks. I would advise you consult with a professional if you are unsure about investing with addy.
I like to think of investing with addy as putting aside money you can afford to ‘lose’ without getting burned. This is also my strategy to investing with addy.
How is income from addy taxed?
Income generated from addy is taxable since it cannot be held in a tax advantaged account such as an RRSP or TFSA.
For income generating properties that have distributions (e.g. rental properties), you will receive a T5 slip for tax purposes. If the income is generated as a result of profits realized from the sale of the property, it will be taxed as a capital gain.
How to Invest with addy
Investing with addy is quite straight forward. It is done through the following steps;
- Visit addyinvest.com and click on ‘join now’
- Choose a membership plan
- Create an account by entering in your profile details
- Verify your email address
- Upload your government photo ID
- Check to see the properties that are listed for investment
- Review the Offering Memorandum
- Decide if you want to invest in the listed property
- Fund your Wallet (either by linking your bank account or through interac)
- Click on the property you are interested in and click on ‘Buy Now’
- Input the number of shares you want to buy
- Accept the Terms & Conditions
- Sign the legal documents and you are done.
To conclude, I am a huge fan of what addy proposes to offer. An excellent opportunity for me to co-own an actual property with other investors while not being actively involved in the daily running of the property.
I also love the fact that investing with addy involves no accreditation. Hence removing the common barrier to entry you find with most large real estate deals.
Additionally, since addy is not in the business of making the rich richer…lol with their maximum investment amount of $1500 dollars per property. This makes it quite appealing for newbie investors as well as those who want to own real estate but can only afford to part with a little amount of money.
As always, make sure to do your due diligence before taking any investment steps. addy is an excellent option to invest in real estate. It could be your ticket to investing in Canadian real estate the easy way.