New York’s reign as a safe haven for investment capital is a large part of what keeps domestic and foreign heavy hitters pouring money into properties in the area.
But those vying for recognition in Forbes magazine are not the only investors looking for a smart and potentially high-yield property to wrap their nest egg in.
“There are a lot of investors out there who don’t have access to investing in real estate deals,” CEO and co-founder of CityFunders, David Behin told Real Estate Weekly.
“They are not capable of writing checks for half a million, or a million dollars, but they want a piece of the action.”
Behin’s CityFunders takes the recent popularity of crowdsourcing that was generated by the likes of Kickstarter and brings it to the real estate investment sales level.
Average investors, such as those in the middle class with steady careers outside of real estate, can roll anywhere from $10-50,000 into a platform-approved property and thus enjoy the same benefits of those that can afford to buy a whole property on their own.
Currently, potential investors can claim a piece of a Long Island City luxury, mixed-use building, a Bushwick retail and commercial property, or a Chinatown mixed-use selection.
The LIC parcel is a new development which will run about $255,000 to construct, while the other two properties are pre-existing structures which are seeking cash-injections for the current investors.
“The idea of buying a building may seem impossible to them,” said Behin while talking about Cityfunder’s target market. “They might not have the time or energy to make that physical investment.”
But Behin found that there was a strong, untapped market of investors who may have typically tied their nest-egg up solely in mutual funds or other non-tangible assets.
These investors showed marked interest in entrenching themselves into the overall robust New York City real estate realm, but were unable to find an avenue through which to do it.
“Real estate crowdfunding is what we’ve been doing for several years between me and my partners,” said Behin who is also a partner and president of the investment sales and advisory division at MNS, the real estate brokerage and services firm.
After rounding up more modest chunks of capital from his inner circle, Behin realized that others would likely be enticed to buy into micro-investments as well.
“We’ve been raising money for investments for over 10 years. Instead of doing it amongst friends and family and people who only know us, now we bring these investments out to the world,” he said, pointing to the growth of MNS as inspiration.
“Anybody in New York City, outside of New York City, people out in Iowa, etc. are eligible. We get a lot of ex-pats,” he joked referring to former New Yorkers who still want a piece of their hometown’s pie.
Behin said that many of his potential investors or current CityFunder members would typically be in the market for a single condo. However, as prices continue to rise in both Manhattan and the boroughs, the return on investment for those purchases is starting to shrink.
In turn, an average investor may not be able to dedicate the time necessary to maintain even a single-unit property, which also acts as a deterrent for those who would otherwise jump at the chance to own in New York.
But while Behin and his partners appear to have redefined the future of Big Apple real estate investment sales, it’s his past that has allowed him to leave an imprint on the business.
“Everything that I’ve done up until now, that experience has really shaped me and brought me here,” said Behin.
A New York City native, Behin credits his upbringing with allowing him to “really understand the nitty-gritty of not just a borough, but a neighborhood, or even a street.
“I have gained an expertise in really being able to spot and add value in New York City real estate,” he added.
But before he had a practical use for the knowledge of the city’s hidden corners, he earned a Bachelor’s degree from Adelphi University and a JD from Fordham University School of Law.
Prior to co-founding MNS, Behin was co-founder of a technology and telecommunications company that created software. Helping to raise $30 million of capital for the company in one year, Behin expanded the outfit — called Yadayada.com — from two employees to over 100.
After his run in the tech-world, Behin set his sites on the real estate sector. Cutting his teeth as a broker at Corcoran, he dedicated himself to entering the development world after he learned the business.
In 2009, MNS was born. “I’m steeped in the New York City real estate market because of MNS,” said Behin.
“We do our monthly reports on condos, rentals and new development. MNS really gives me the opportunity to see the real estate market the way a stock broker sees a stock ticker.”
His role with MNS, which despite his CityFunders commitments, has not been diminished, allows Behin to “keep a finger on the pulse of small details,” and subtle changes in the marketplace.
“That type of information is power,” said Behin. “It gives me the ability on a day to day basis to really understand this market. I don’t see myself coming out of the broker end,” he added, conceding that to limit his role at MNS would make him less effective in other aspects of his real estate career.
“Neighborhoods in New York City are constantly evolving,” he said. “I think that for my investors at CityFunders I’m that much more valuable to them because I have this (MNS) grounding.”
CityFunders, which is exactly 12 months old, has yet to offer an investment opportunity in the Bronx or Staten Island. However, Behin said they are certainly open to it and that a second deal in New Jersey could be unveiled this fall following a successful venture in Edgewater during the company’s inaugural year.
As for expanding outside of the Greater New York City area, Behin would love to spread his reach that far. But he won’t bite on a property unless it can be given the same meticulous attention that a local parcel would receive.
“I think part of our growth is going to be outside of New York City,” said Behin. “The way that I’m going to do that isn’t going to be doing one deal in Denver, one deal in Maine, one in Washington D.C. When I go into a city, I want to plant some roots there. I want the same type of expertise that I have in New York City.”
Behin added that should CityFunders expand, they’ll hire or partner with a new team member who is an expert on that particular locale.