FAQ’s: Investing with ArborCrowd
What makes ArborCrowd different than other real estate crowdfunding platforms?
ArborCrowd is part of Arbor’s family of companies – an asset that enables us to provide investors with the highest quality real estate opportunities. ArborCrowd’s investment model is unlike any other – the real estate is at the core of the business and investor’s money is not blindly pooled into different buckets of assets. By offering investors the choice, transparency and knowledge of what deals their money is going into, ArborCrowd has created a better way to invest.
What is the relationship of ArborCrowd with Arbor Realty Trust?
ArborCrowd is part of the Arbor family of companies that includes Arbor Realty Trust, Arbor Commercial Mortgage and AMAC. The family of companies, backed by more than 30 years of experience, was established in order to build expertise in every part of a commercial real estate ecosystem. ArborCrowd leverages the ecosystem to curate high-quality real estate deals for investors.
GENERAL INVESTOR QUESTIONS
How does ArborCrowd work?
We provide accredited investors with access to real estate investment opportunities that are managed by tenured commercial real estate professionals. After creating an account, prospective investors can:
- Get access to detailed business plans on open investment opportunities, including:
- Projected pro forma
- Sponsor track record
- Market reports
- Property photos
- Rental and sales comparables
- Learn about funded offerings with access to past business plans.
- Ability to submit an offer, sign legal and transaction documents, and make electronic fund transfers – all online.
What is the minimum investment amount? What is the maximum?
The minimum amount to invest is $25,000. There is no maximum.
What is an accredited investor?
To meet the definition of an accredited investor, an individual must have an income exceeding $200,000 annually or $300,000 together with a spouse. This income must have been established in each of the prior two years, and should reasonably be expected to be the same for the current year. Alternatively, you must be an individual with a net worth of more than $1 million (either alone or together with a spouse), excluding the value of the individual’s primary residence. (Source: U.S. Securities and Exchange Commission)
How does the investment process work?
Investing takes just 3 easy steps:
- Create a free, no obligation account. If you already signed up for an account, you will receive notification from us when new investment opportunities are available. The notification will provide you with a link to the opportunity’s detail page where you can access deal-specific investment information — including the entire capital raise amount and minimum investment sought — for the specific opportunity.
- Learn about new investment opportunities. We provide you with the full resources to learn for yourself if this is the right investment opportunity for you.
- Submit an offer online. After you’ve decided to invest, you will submit an offer amount. Your investment offer is not complete until the total funding target has been reached and you receive confirmation that your investment has been accepted.
What do I actually need to do to make an offer on a deal and invest? How long does this process take?
Here are the specific steps you’ll take once you decide to invest – all of these steps can be done online:
- Fill out the online form to make an offer.
- Get verified as an accredited investor. There are 2 ways to be verified:
- Once you are verified as an accredited investor, and we’ve approved your offer, we will provide funding instructions so you can wire funds.
- This process takes approximately 2-5 business days.
What does it mean when I submit an offer to invest? Do I have to provide funds immediately?
Your offer is a commitment to invest in the specific opportunity. Once we verify that you are an accredited investor, we hold those commitments until the minimum investment threshold has been met. Once the minimum is reached, a capital call is issued and the closing process will commence.
Your investment is not final until the minimum funding target has been reached, all of your legal documents have been signed and your offer has been accepted. Once the closing is complete, investors will receive a copy of the final – and executed – closing documents.
If your offer was not accepted, please don’t hesitate to call an investor relations manager at info@ArborCrowd.com or (844)-365-1200.
What does it mean when an offer is “oversubscribed”?
On occasion, a specific opportunity will be oversubscribed — which means that there is so much interest that we simply cannot accommodate all the offers we receive or cannot accommodate the full offer amount that a prospective investor has offered.
If this occurs, we will reach out to you directly to inform you of other options. Often, an offer can still be accepted at a lower investment amount. We may also invite investors to review other opportunities that ArborCrowd has in its offering.
How does a prospective investor transfer investment funds to ArborCrowd?
The investor can authorize an automatic electronic fund transfer or mail in a check.
How long does it take for ArborCrowd to raise funds for its deals?
The time it takes to raise equity via the crowd will change from deal to deal. To give you a general sense of timing, here’s how quickly our past deals have gone:
- 1413 York Avenue: $2 million raised in 10 days
- Clinton Hill: $4 million raised in 30 days
- Southern States: $2 million raised in 5 days
How do investors get a return on their investments?
Investors receive a return on their investments when the project’s sponsor distributes profits. All investors can review the pro forma for each deal to get insight on how and when the sponsor estimates distributions will be made. In general, there are several factors that determine when, and if, distributions are made:
- Rental income: Typically, the multifamily properties that ArborCrowd invests into are currently occupied with tenants paying monthly rent. In addition, the business strategy will be to increase those rents that are in place. As a result, distributions will be realized when there is excess cash flow after paying all expenses and debt service in a quarterly or annual fashion.
- Refinancing: A refinance occurs when the project sponsor approaches the capital markets for a new senior mortgage. The rationale behind this can vary, but the two biggest reasons for a refinance are to secure:
- A more favorable loan terms such as a lower interest rate; and
- A higher appraisal amount due to a repositioning.
- With respect to better rates, more monthly cash flow would be created due to lower monthly payments. With respect to a higher appraisal amount, the new mortgage proceeds will be greater than the mortgage that was in place. As a result, there will excess cash to be distributed after paying off the original loan balance.
- Property sold: When the investment property is sold, the remaining profit available will be distributed to investors after all expenses, debts and reserves are paid off.
The projected returns are different for each specific opportunity. Returns are projections and are not guaranteed and may differ from what was projected in the pro forma.
Am I allowed to resell or transfer my investment?
No, the nature of real estate investment is to create value and earn cash flow over a longer period of time. As a result, the invested equity must stay in an investment during this value-creation process.
With that said, the sponsor’s estimated timeline may be longer or shorter than what was projected. Prior to investing, you should understand that your investment will be held for an extended period of time when compared with traditional equity or bond markets.
Is the ArborCrowd platform secure?
How does ArborCrowd find its sponsors?
One of the most important elements of a successful deal is finding a sponsor with a proven track record for success. As a result, ArborCrowd will only present the Crowd with deals that have been vetted and are ideally suited for crowdfunding.
Because ArborCrowd is part of the Arbor family of companies, ArborCrowd has access to a proprietary network of the industry’s most savvy sponsors. Many times, we have worked with the sponsors in the past and have first-hand knowledge of their experience.
How does ArborCrowd choose its deals?
We perform our due diligence with an emphasis on current cash flow and the opportunity to enhance that cash flow. We take into account location, the local job market, upcoming improvements to local infrastructure and transportation, demographics, and other relevant indicators.
Every deal we present to the crowd has been vetted by ArborCrowd’s CEO – who has more than 30 years of experience in the industry.
Why would a sponsor choose to raise equity through ArborCrowd?
Crowdfunding has the potential to be more advantageous to the sponsor than raising equity through traditional institutional sources. With the ability to raise more equity, a sponsor can re-invest what’s raised from the crowd and put more into an existing value-add property or source better deals even faster.
Sponsors choose to work with ArborCrowd because our leaders have more than 30 years of experience thriving in multiple, and often tumultuous, market cycles. Additionally, the Arbor family of companies can provide other relevant services such as providing the debt for a project’s acquisition.
I have an investment property that I’m looking to raise funds for. Can I raise equity through ArborCrowd?
If you’re a sponsor and have an interest in working with ArborCrowd, please contact us at info@ArborCrowd.com or (844) 365–1200.
How do I create an account for ArborCrowd?
It’s easy and all done online. Prospective investors can create an account by providing a name, phone number and email address – that’s it. Click here to create your account now.
How do I delete an ArborCrowd account?
Investors can close an account by contacting an investor relations manager at info@ArborCrowd.com or (844) 365–1200.