Ariella Gomolin, an investment banker, and Scott Fryman, a lawyer, shared with us what attracted them to invest in commercial real estate with ArborCrowd. Despite their impressive careers, the young married couple lacked first-hand real estate investment experience as well as the network and access necessary to make institutional quality investments. However, Ariella’s underlying interest in real estate and Scott’s penchant for industry disruptors led them to choose ArborCrowd. Here is what Ariella and Scott have to say about their experience:
AC: How did you become interested in real estate investing?
Ariella: I call myself a real estate enthusiast. Since I was in high school, I’ve always tracked different developments. No one in my family was particularly invested in real estate at all. So, maybe it was just my way of wanting to connect with something that I had never really been involved in and learn more about the industry.
Scott: My dad has always been a stock market enthusiast. My parents were invested in the stock market during the dot-com [bubble] and after that, they decided to diversify and invested in some real estate. So, I was exposed to that process at an early age.
AC: Did you have any prior experience with crowdfunding?
Scott: [Prior to ArborCrowd] I had invested in a crowdfunding site called Lending Club, which is debt crowdfunding on personal loans with $25,000 — $50,000 increments. I was always sold on the idea of cutting out the middle man and market disrupting ventures.
AC: What kind of investors would you say you are?
Scott: Overall, I would say we are risk adverse. We definitely understand the value of having money work for you and not putting it under a pillow, but we try to manage being risk averse with wanting to make steady returns. We invest now mostly in index funds or huge market cap companies that are not really subject to the volatile swings that small companies may be subject to.
AC: Being risk averse, why did you invest in real estate crowdfunding and why with ArborCrowd, specifically?
Scott: We loved the idea of crowdfunding in real estate. And specifically, with ArborCrowd, we both were very comfortable with the people who are at the helm. We understand it’s [affiliated with The Arbor Family of Companies], which has proven itself year-over-year. And we also liked the business model, where we, the limited partners or passive investors, have to get a certain return before the [deal sponsor] can really capture [any] upside.
Ariella: What I liked about ArborCrowd was that it invests in multifamily [properties], which weathers the storm of down market cycles a little bit better than other real estate asset classes. I also like [ArborCrowd’s] educational efforts, such as having a fireside chat with the sponsors so that investors could learn a little bit more about the opportunity.
AC: What was appealing about 1413 York Avenue, the first transaction you invested in?
Ariella: 1413 York Avenue is a six-story, New York City, Upper East Side multifamily building that ArborCrowd had already identified and [its affiliate] had financed. The plan to bring the equity piece in it to back fill the already capitalized renovations that they were set to complete and then methodically increase their rent and see returns for their investors was attractive.
AC: Why did you choose to invest in our Cove West Hartford offering?
Ariella: You could say it was faith. My sister was born in West Hartford, because my father finished his medical residency and my parents lived there during his first job. You could say I have roots in West Hartford. So, I knew there are certain industries close by that fuels the economy and fuels multifamily real estate. Also, I like the size of the project and I think that the business plan for how they were going to increase rents was attractive. I felt it was a great opportunity and these are the kinds of assets that we can’t own without crowdfunding.
AC: What is your ultimate goal with the gains you potentially could make through investing?
Scott: At some point we will be looking for a residential property to live in. It would be great if we could keep on rolling that money into new investments but time will tell. Right now, our expenses are very low. We live pretty frugally. We both understand that will change in a few years.
AC: As millennial investors, what is your biggest concern?
Scott: My biggest concern is losing money and having a regret about it. Looking back and saying that was a stupid decision, because I made the decision on a whim without proper due diligence.
Ariella: We know that people would argue we should be putting our money in the riskiest assets, because we are young. I think we are trying to look at each investment that we go into really methodically and thoughtfully, because every decision that we make now could really make or break certain desires or necessities in the future.
AC: What are your overall thoughts about the real estate crowdfunding experience with ArborCrowd?
Ariella: This was our entrée into real estate investing and it has been a positive experience so far. We invested into a diversified asset class that we both felt super comfortable with the risk profile and happy about the potential upside that we can see from our investment. ArborCrowd has already had one success— the Southern States Portfolio — [which had a more than 29% internal rate of return for investors]. Obviously, not every investment is going to see that kind of return, and investors should know that, they shouldn’t be naive about that. But to sort of see that track record already realized and to know the breadth and experience that The Arbor Family has, it makes an investor, especially us, feel comfortable with who has our money.