Invest in real estate, without the hassle or expense of managing property.Learn More
Real estate is the largest investable asset class in the world, worth $217 trillion.Learn More
So, what are the traditional ways of investing in real estate?Learn More
According to the DFSA Rule Book, COB Section 2.3.7, an individual is a professional client if:
The individual has net assets of at least USD 1 million, excluding the value of primary residence. Assets that are indirectly owned can be included in the calculation and either
Within the previous two years, the individual is, or
Has been, an employee in a relevant professional position of an Authorized Firm or a Regulated Financial Institution or
The individual appears, on reasonable grounds, to have sufficient experience and understanding of relevant financial markets, products or transactions and any associated risks.
Zaim will need to verify the above information in order to classify you as a professional client.Close
Zaim enables you to review each investment on its own merits before you make an investment decision. Diversify your portfolio manually or automatically with investments across geographies.Close
It is bigger than debt markets ($200 trillion) and almost 3 times the size of equity (shares) market ($73 trillion). The global GDP of all countries is approximately $76 trillion. Why is real estate so large? Well, there are almost 7 billion people in the world that need to have a roof over their heads and a place to work.
You may have heard of the phrase “safe as houses”, as it is a relatively safe asset class for people to invest in. It provides good diversification in one’s portfolio from the volatility of the stock and bond markets. Real estate provides a steady cash flow through rental income and capital appreciation, as the price of real estate increases over time. There might be periods where real estate prices decrease but you still earn rental income during those periods providing some value to your investment.
A study conducted by the economist titled “The Rate of Return on Everything, 18702-15”, looked at 16 advanced economies over the past 145 years. Specifically, they compared returns on equities, residential real estate, short-term treasury bills, and longer-term treasury bonds.
What did they find? To most people’s surprise, they found that residential real estate out-performed everything else over the last 145 years. Residential real estate returned an average of 7.05% a year. Stocks were not too far behind with 6.89% return a year. One of the key factors for real estate to do so well was the fact that half of its returns were made up of rental income and the other half from capital appreciation. This is the power of real estate, it provides steady cash flows even in tough economic times to ensure you continue to increase your wealth while preserving your capital. If you ask the wealthy, they will tell you it’s harder to retain the wealth than to accumulate and many use real estate to grow and preserve their capital.
The returns look even more attractive when you compare it against the level of risk in each of the asset classes. One of the key factors to consider is to evaluate returns per level of risk. In the finance industry this is known as the Sharpe Ratio. But to keep things simple, think of it as returns divided by risk. A higher ratio indicates a better investment – greater return, relative to the risk. Real estate had the highest Sharpe ratio of 0.7 compared to stock that had 0.27.Close
The most common form is direct purchase, meaning you buy that entire real estate outright. Easier said than done, as real estate investing requires a lot of capital upfront. That is why only 12% of the world population owns real estate, it can be very expensive.
The other way is to finance real estate investment or purchase. You borrow money from a financial institution to cover the cost of the property and in exchange you pay them interest over a period. This allows you to purchase a property for a price more than you can afford and use that money from rental income to cover your costs and mortgage payments. This is one of the big benefits of real estate as it enhances your returns but at the same time increases your risk as well. By financing, you expose yourself to interest rate risk. Meaning, if the interest rates rise, your monthly obligation will increase, and if at the same time your property is vacant it can become difficult to cover your monthly obligations putting your investment in jeopardy.
You can also invest in real estate through indirect channels such as REITS (Real Estate Investment Trusts) or private funds. However, at times these are restricted to accredited investors, require a minimum investment amount, and are often costly. It also provides less transparency on your ownership and little to no control on your investment. It somewhat increases liquidity for your investment. However, your portfolio diversification is reduced, especially with public funds like REITS that are traded on stock exchange which are correlated with stock markets rather than real estate. Explore the legal and fee structures before deciding to invest through one of these channels.Close
As the name suggests, Crowdfunding is raising small amounts of funds from multiple people to provide capital to a new business or projectLearn More
They launched a campaign to raise money from the community to upgrade a building and serve the community.Learn More
Crowdfunding breaks barriers and lowers the entry point for real estateLearn More
Crowdfunding has been around for more than a decade now. It was essentially started and pioneered by companies like Indiegogo and Kickstarter that allowed people to fund unique ideas and products. The concept was simple. Anyone could create a funding page for their idea or project on one of these sites and others on the platform would contribute money towards that idea or project in return for a reward or the item itself.
This concept really took off in the financial space post 2008 crisis where liquidity had dried up and businesses were finding it difficult to raise or borrow money. Crowdfunding allowed businesses to raise debt or equity from the crowd. Investors in exchange received interest for providing debt or some ownership in the business for providing equity capital.Close
They launched a campaign to raise money from the community to upgrade a building and serve the community. The concept quickly evolved given its appeal and relatability to people. Almost everyone likes to own real estate, yet many people can’t afford it as it requires a lot of capital upfront. Crowdfunding allows likeminded people to pool their capital to acquire a real estate asset which they collectively own and share the returns generated from that asset. For example, there is an apartment for $100,000 Ten people contribute $ 10,000 each towards this property. Now they will each own 10% of the property. All returns generated from the property, whether that is rental income or profit from selling the property in the future, will be shared among them.
Each of them will receive 10% share of the returns in proportion to their investment.Close
A crowdfunding mechanism allows you to build a diversified real estate portfolio. Diversification protects you against the concentrated risks of owning only one or two properties. Also, the process of investing in real estate becomes easy, as most crowdfunding platforms are digital, making it completely hassle-free for you to not only invest, but manage your portfolio. The crowdfunding platform would usually do the hard work of conducting due diligence on each property that goes on the platform and curate all the necessary
market information required for you to make an investment decision. This allows you to see only pre-vetted opportunities, hence reducing your time and effort required to find good investment opportunities. A key benefit of this is, it allows you to put your money to work and start generating a steady cash flow through rental income that can be reinvested in other real estate opportunities or other investment products allowing you to compound your investment.Close
A lot of retail investors get scared during market downturns.Learn More
Firstly, you must be registered on the crowdfunding platform to get access to the opportunities listed on it.Learn More
Many platforms offer different structures and its important to understand to ensure your legal protectionLearn More
Many savvy investors try to take advantage of market corrections to invest in quality assets as they have a long-term view when it comes to investing. Sadly, most of us don’t have enough money saved up to take advantage of market down turns. We are probably struggling in the slow market, or too afraid to take the risk, especially investing in real estate as it requires a lot of one’s capital to make an investment.
But not anymore. Models like Zaim’s mean that by pooling your (small) amount of investment money together with others, you are able to generate the sort of buying power only the wealthy normally have. For the average person, this is a great idea, as you are not allocating a majority share of your portfolio into one investment, making you more able to shoulder risk in the current market situation.
In this current low-price market, through a crowdfunding investment, you have the ability to find a good entry point that will provide a good yield. In practical terms, this means you can make a decent return and get paid while you wait for the next up cycle.
By being smart with your money, diversifying your investment into a number of smaller, more manageable pockets, you are giving your wealth the chance to grow.
You are joining forces with other like-minded people, all helping to grow each other’s investment
Most of us don’t have the time or ability to continuously hunt for the best property investment deals. Investing in a real estate crowdfunding vehicle means the legwork has already been done. Experts have already researched the markets, worked out where the best possible investments lie, and made risk assessments. It’s time-saving, it’s convenient, and it mitigates risk as much as you want it to. Of course, as with any investment, it’s important that you do your homework to ensure you are investing through a reputable and regulated platform that provides you full protection and complete transparency.
Crowdfunding breaks barriers and lowers the entry point for real estate. A crowdfunding mechanism allows you to build a diversified real estate portfolio. Diversification protects you against the concentrated risks of owning only one or two properties. Also, the process of investing in real estate becomes easy as most crowdfunding platforms are digital making it completely hassle free for you to not only invest, but manage your portfolio.
The crowdfunding platform would usually do the hard work of conducting due diligence on each property that goes on the platform and curate all the necessary market information required for you to make an investment decision. This allows you to see only pre-vetted opportunities, hence reducing your time and effort required to find good investment opportunities. A key benefit of this, is that it allows you to put your money to work and start generating a steady cash flow through rental income, that can be reinvested in other real estate opportunities or other investment products allowing you to compound your investment.Close
After the platform has conducted their due diligence on the property, they will market that opportunity on its platform to its users. You should be able to see all the details about the property, particularly the financial details that list the property price and associated purchasing costs. At this stage, the users of the platform can review the details of the investment opportunity and decide to invest in it. There is usually a time period for the property to be marketed. It can range from a few weeks to few months depending on the geography and type of asset. The platform must reach the funding target during this time frame for the transaction to complete. Example, a one hundrend thousand dollars $100,000 apartment is listed on the platform for 30 days. The total funding target with the property price, plus other closing costs such gormnet feesfee, brokerage fees etc. Let’s assume those costs are $5000 . So, the total funding target would be $105,000. The platform users will then review the property details and decide to invest in this apartment. If they want to invest in the apartment, they will allocate some capital towards it; meaning they will buy a “fraction” of the apartment. If the real estate crowdfunding platform is regulated, the money will be held in a third-party custodian/escrow account until the total funding target is reached. Once enough users have invested in the apartment to reach the total funding target, the platform will purchase the property on behalf all the users who invested in that apartment. In the event that the total funding target is not achieved in the allotted time, the funds are refunded back to users without any charges or fees.
Now, these investors will collectively own this apartment and will benefit from the returns generated from it. They will be provided with a personalized dashboard where they will be able to track the performance of their investment.Close
This section will lay out how investments are structured on the Zaim platform, particularly for United States properties. Each investment opportunity that is marketed and transacted on our platform is registered under a LLC (Limited Liability Company). The investors in the property then become shareholders of this LLC and own the property via that LLC, providing them full transparency and legal rights to joint ownership of the property. This provides investors further protection in case Zaim stops functioning. Given that Zaim has no ownership in this LLC and the LLC is a Limited Liability Company, it will continue to exist ensuring your investment is protected.
Our LLCs are established and registered in the Delaware, USA.
This structure provides investors full transparency and legal rights on ownership, as well as, protection if Zaim was to cease operation.Close
Zaim focuses on ready residential properties.Learn More
Each investment opportunity has a suggested investment period.Learn More
Like any other investment, there are risks that need to be considered when investing via a crowdfunding platform.Learn More
You will earn dividends on your investment through rental income generated by letting the property. If the property is rented out on monthly rent, you will receive 12 dividends per year. If the property is rented on bimonthly or quarterly rent, you will receive dividends same way. In addition to rental income, you also have the potential to earn returns from price appreciation. If property prices increase during the period the property is held, you will earn capital gains on your investments when the property is sold. For example, if you invested 10% in a property that is worth $100,000, this would appreciate in value over 5 years to $ 130,000 This means your initial investment of $10,000 would be worth approximately $13,000 which will be resized when the property is sold . However, if the property prices were to decrease in value, your investment will also decrease in value. In summary, by investing in real estate you can earn regular rental income via dividends and capital gains with property price appreciation. Please note, the value of your Zaim investment can go up or down and historic performance is not a guide to future performance. Achievement of rental and capital returns will depend on a range of factors, including the property asset as well as the wider economy.Close
Each investment opportunity has a suggested investment period.
At the end of the investment term all investors can vote to sell their holdings. The property valuation will be made by an independent and State approved appraiser or valuator. This process is outlined below:
The property is inspected and valued by an independent agency to provide valuation services. Considerations towards any potential liabilities that the investment vehicle may have, outstanding service charges or taxation, are also made before a per share market value is given to the investor.
This information is provided on the dashboard where the investor can vote on whether to sell at the market value or extend the investment term.
Where a majority of investors decide to sell the property, it will be relisted on the Zaim platform at the new market value for up to four weeks. This process is similar to the initial crowdfunding of a New Listing.
If this process is unsuccessful, Zaim will commence proceedings to sell the underlying property off the platform. The property will be advertised for sale on the open market at the valuation determined by the independent valuator. Zaim will administer this process. Upon successful completion of the sale, all investors in that property will exit and net proceeds will be distributed to investors. Note that third-party costs, such as legal fees, will reduce the proceeds available for distribution to investors, but Zaim will not charge any fees or make any profit margin on the third-party fees.
Zaim will soon introduce a Secondary Market. Once operational, at any time, you can offer your holdings to other investors on the Secondary Market at a price of your choice. Your co-owners will have the first right of refusal to buy your holding. If there are no buyers, then your holdings will be marketed to all users on the platform. This will give you full control and flexibility on your investment.
However, the Secondary Marketplace should not be considered as a trading facility, where investors relist shares and choose their own price. This is to ensure that relisted shares do not misrepresent the market value of the underlying asset at any given time. Depending on the price you are offering, the opportunity may or may not attract prospective buyers (and therefore may or may not sell). It should be kept in mind that, while the facility provides a potential opportunity for an early exit, there is no guarantee of a completed sale. In this scenario, your opportunity to exit is limited to the above.Close
Many of us are not necessarily experts when it comes to real estate investing. You are most likely relying on the expertise of the platform and have to assess the management and team of the platform. You should evaluate their due diligence process and ask them questions to get comfortable that they understand the market and can find good investment opportunities. You obviously have exposure to real estate, so you will be exposed to all those risks, such as loss of property value and loss of rent. Most platforms are relatively new, providing fewer options in the beginning to diversify your risk. The biggest risk is liquidity, as you are investing in a non-tradeable company that owns the property. It may be difficult to sell your investment because of lack of investors willing to buy such an investment. So, as an investor, you must be prepared to commit to investing for the full investment period.Close
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