ArborCrowd Review | Commercial Real Estate Investing for Individual Investors

In our ArborCrowd review, we examine this real estate investing crowdsourcing platform to determine if it’s a good investment option.

ArborCrowd Review

Have you ever wondered what it would be like to become a property mogul using just your smartphone or computer? An exciting investment platform called ArborCrowd is making it possible to find out. This real-state crowdfunding platform delivers investment opportunities right to your screen and offers a one-step process for investing your money in real estate. The biggest question about the ArborCrowd platform is how exactly will individual investors get a return on each investment?

Let’s dive into a review of ArborCrowd and see what separates them from other crowdfunding platforms.

ArborCrowd Investment Requirements

While signing up for ArborCrowd is easy, you will have to meet some requirements before you can participate on this platform and begin investing. ArborCrowd requires a minimum investment of $25,000. They do not place a cap on the amount you can invest.

It’s also necessary to be an accredited investor in order to participate with ArborCrowd. To be considered an “accredited investor” you must have an income that exceeds $200,000 annually (or $300,000 together with your spouse). You must also be able to establish a net worth of more than $1 million. If that sounds difficult, then you’re not going to like the fact that your net worth can NOT include the value of your primary residence. Admittedly, ArborCrowd is for a select group of deep pockets … not the casual once-in-a-while investor.

To verify that you are an accredited investor, you must complete one of two simple steps

  • Have a letter sent from your CPA verifying your net-worth
  • Complete the process of accreditation through VerifyInvestor.com

Investing with ArborCrowd

To be honest, the most difficult process in investing with ArborCrowd is becoming accredited. Once that hurdle has been overcome, the fun starts and investing with ArborCrowd is actually quite simple. After creating an account, you can browse through the available investment opportunities, select one you’re interested in and make an offer.

After you’ve made an offer, you simply wait until the entire project has been funded. Only after the funding target has been met, will you be required to transfer funds to ArborCrowd to satisfy the offer you’ve submitted. Funds do not need to be held inside your ArborCrowd account for any reason. Transferring funds can be done either by bank wire, or simply writing a check and putting it in the mail.

Once the closing is complete, all investors receive their closing documents. And just like that, you’re a property owner!

Just how long it can take from listing an offer to closing is a mixed bag. ArborCrowd boasts of a few deals that have been put together in just a handful of days. But also shows you some that have taken two or more months to complete. That said, once there are enough offers on the platform to complete an offer, closing almost always occurs within 30 days.

The big benefit of going with a platform like this instead of attempting to find investment opportunities on your own is that ArborCrowd does most of the heavy lifting in terms of finding and researching investment opportunities. You will be one click away from detailed business plans for investment opportunities located all around the country when you have an ArborCrowd account. Here’s a rundown of the information that will be available for viewing regarding each opportunity:

  • Property photos
  • Sales and rental statistics for comparable properties
  • Market reports
  • Sponsor histories

An example video you might find in a property proposal from ArborCrowd is below (for a project in Miami).

Making Money!

So you’ve signed up. Verified that you’re an accredited investor and made an offer on your first ArborCrowd opportunity. You’ve transferred funds to ArborCrowd and they’ve successfully closed on the property. You now own property on Madison Ave in NYC! So where’s your profit?

One of the features that sets ArborCrowd apart from it’s competition is it’s use of Sponsors.

ArborCrowd stands out from the pack because of the fact that it doesn’t just blindly present opportunities to online investors. Users are given the opportunity to co-invest alongside seasoned sponsors. The sponsor of each project has just as much skin in the game as the investors. It is up to the sponsor of each project to determine when and how profits will be distributed. These details are very carefully laid out in the proposals. Distributions are typically made after rental income is collected, when refinancing takes place or when a property is sold.

Sometimes a project takes longer than expected, and sometimes returns are earned faster. But it is always the decision of the sponsor on what steps to take. From an investor point of view; it can be quite difficult to simply sit back but that’s the name of the game. Take comfort in knowing that every single deal presented on the ArborCrowd website has been vetted by the CEO, Ivan Kaufman. Due diligence on not only him but any offer you want to be a part of is an absolute must.

Two Reasons NOT to Like ArborCrowd

1. Over Subscribed

Some opportunities can potentially become over subscribed. This means that an investment receives too many offers. ArborCrowd won’t be able to accept the full offer amount made by every potential investor when this happens. You may still be able to invest a lower amount in some cases. However, the decision ultimately rests with ArborCrowd in regards to how the situation will be handled.

This could be a detracting feature if you don’t like the idea of being unable to negotiate terms or make a convincing case for your investment the way you would if you were sitting across the table from someone while making a deal. One other feature that could potentially turn you off is that investors are not permitted to sell or transfer their investments. This means that your invested equity must stay in the project even if the timeline for value creation ends up being longer than what was projected.

While not being able to invest in the property of your choice sucks, it’s also a good sign for the health of your future investments that ArborCrowd has a wide variety of lenders willing to invest in their platform.

2. Liquidity

If you make an offer, it’s accepted, funds are transferred and the property closes, you are invested forever. This means that you cannot sell your take to someone else, and you cannot have someone else from ArborCrowd buy you out. It’s yours until whatever the terms of the deal you’re a part of have completed.

The opportunities presented by ArborCrowd are not quick flips and they’re not readily available if you’re investing income that you may need in a moment’s notice.

ArborCrowd Bottom Line

ArborCrowd is extremely good at what it does. It is a solid choice to consider if you’re looking for an investment platform that takes care of most of the hard work of finding, vetting and setting up investment opportunities. The company chooses investment opportunities primarily based on their potential for creating cash flow. Each property is audited for profitability based on things like location, the local job market, local transportation options, demographics and other essential criteria.

What makes ArborCrowd unique is that no deal is allowed to be presented to investors without first being vetted by the company’s CEO. The bottom line on ArborCrowd is that it’s a good fit if you’re looking to invest in properties and take a passive approach to making every deal. It can be a frustrating platform to deal with if you’re used to having more control over how your investments are handled but as the great Sam Hinkie once said:

“Trust the Process”

Topics: Investing
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