Our CEO, Craig Cecilio, takes the floor at the New York Stock Market with Cheddar News. Kristen Scholer & Tim Stonovec go over alternative investments for the Average Joe with Cecilio. They go over the current alternatives as well as the pipeline that is coming up.
You can see the entire interview clicking here, and you can find it below as well.
TS: Real Estate may have an intimating price tag that keeps many from investing, but Crowdfunding platforms are making the asset class more approachable to investors with smaller budgets. Joining us now to discuss is Craig Cecilio, he is the CEO and Founder of DiversyFund. It’s an online Real Estate Crowdfunding platform. Thanks so much for joining us. It’s good to see you this morning.
CC: Thanks for having me here.
TS: The stock market is rewarding investors with significant gains. We’ve seen huge gains over the last 12 months largely outperforming, of course, the Real Estate sector over the past year, so why should investors allocate some of their investing budgets to Real Estate?
CC: Alternative investments are very important for people to invest in. With the advent of crowdfunding now its opened up to the general public. For the first time, we have online solicitation, and its opened up to the average investor. Most investors aren’t aware of alternative investments and of alternative investments in Real Estate as well.
KS: So, what are some of the major holdings here? What makes up this fund?
CC: Our fund is a mix of residential and commercial properties scatted throughout the US. What I’d like to get back to is the alternative investments for the average Joe. A lot of the assets that we are focused on, they are not going to be approached about. The real estate developers, the real estate hedge fund managers are always after the high ticketed item. The person with hundreds of thousands of dollars, as clients but through our platform, we can leverage technology and have the average investor invest as little as $500 dollars in these investments.
KS: But then obviously they still get diverse holding properties commercial and residential all across the US? Globally?
CC: Across the US. right now, we are focused primarily regionally in the western US. As we scale our company will be located throughout the whole nation.
TS: Craig, I was looking at your site earlier today, you have to be an accredited investor right now, which a vast majority of people who are ever looking to make their own investments aren’t, in order to participate.
CC: Currently, there are around 10 to 12 million accredited investors throughout the US. Currently, we are open to accredited investors, and we should be open for the average Joe, the non-accredited investors in the next 2 to 3 months. We recently had our paperwork filed, we are going to open that up to everybody. We are looking at is really improving our technology, so we can handle the flow of the non-accredited investors.
KS: What kind of focus is on the technology right now? What changes are you making to make sure that it goes seamlessly?
CC: With technology a lot of $500-dollar investors there is going to be a lot of paperwork involved, accounting and coding and we want to make sure that it is all perfect and ready to go when the website is opened up to the non-accredited investor.
TS: “Passive Income” is what you are talking about and it is sort of how you are selling it off on the website. What are the fees associated with it? How do you guys make money?
CC: We have a no-fee fund and what we have is a vertically integrated platform. We act as the developer and managers of the assets. Those assets aren’t owned by another party, they are owned by the company itself and by the investors. This way we are able to wave any fees that we charge the investors and we just collect our fees for management fees of the asset itself.
KS: Is there a reason why it is largely focused on the western side of the country for now?
CC: It is where we originated from. Myself and my partner in this, the other co-principal of the company. That is where we have over 20 years of relationships in Real Estate, and right now we are sourcing a lot of transaction throughout the west coast for that reason.
TS: I want to make sure how the fees-structure works. So, there is a management fee?
CC: No fee charged to the investor. There is a developers’ fee that we get for developing the project but that does not come out of the return to the investor.
TS: And what’s your pitch to developers?
CC: This is not opened up to developers because we are the developers of the asset itself. We are the developer and management of the asset. DiversyFund does that. Our pitch is more to the average Joe, the investor, “Hey come on board with us.” We own the asset, therefore, we are able to provide better transparency, reporting, quality control, we got the experience. It’s not like you are sticking your money into a new corporation with a new person in the industry.
KS: So, if an average investor wants to take advantage of this, how do they go about accessing the fund?
CC: Everything is located on the website. A couple of clicks to a button and it’s automated. The money transfers straight out of your bank account.
KS: And what is the demand that you have seen already?
CC: A lot of demand. A lot of demand. It’s quite impressive how many people across the whole country are investing in our platform.
KS How long has it been investible?
CC: Around November of 2016 is when we started the vertically integrated platform. That’s when we started taking the investments online through the platform itself. It does take some time to get it going, the website itself and the platform with all the coding and everything. And, within this past year, we came close to about 100 million dollars in assets under management.
TS: Craig, what areas of the country are you seeing as most attractive for Real Estate development right now?
CC: I would say pockets throughout the whole country. It’s really relationships at the end of the day. Having the experience of locating the correct investments, the right properties, the right projects. It really takes some experience to know that and the right relationships. We are finding stuff throughout the whole US. We have a huge pipeline, a billion-dollar pipeline of assets we could purchase.
TS: Are there no real specific regions that are hotter than others that you are seeing?
CC: I would say a lot of sub-markets within certain markets. For instance, in our case, we are located in California. We know some pockets in San Francisco, LA, and San Diego in which we find some opportunities. Not the whole area of each principality but more kind of the sub-markets in each area.
KS: Interesting. All right. We are going to have to be focusing on this. Of course, people can take advantage of it if they want to.
TS: Craig, thanks for joining us! That’s Craig Cecilio. He is the CEO and Founder of DiversyFund. Joining us live from the floor in the New York stock exchange.