addy review: If you’re seeking a means to invest in Canada’s overheated real estate market but can’t afford to live in your city, addy is a viable option.
With as little as $1, addy allows you to invest directly in commercial and residential REIT properties across Canada. This allows Canadians to invest in REIT in a new, enjoyable, and cost-effective manner.
Addy Invest Review: what is addy?
addy is a relatively new startup, having only begun operations in 2018. It’s a real estate crowdfunding platform that allows investors to purchase shares in investment properties all around the country. Investors from British Columbia, Alberta, and Ontario can invest any amount between $1 and $1,500 in institutional-grade real estate across Canada, such as multi-family and commercial buildings.
Types of properties that have been available to investors on addy:
- a commercial building with Starbucks as the tenant
- a campground
- apartment complexes
A membership with addy is $25 per year, and you can pay this charge when you buy your first property. Alternatively, you can pay $500 for a 5-year membership as an addy “Believer,” which includes a lifetime membership and a few “hidden bonuses” when you join up for the platform.
Is addy invest legit?
Yes! addy invest is a Vancouver-based real estate technology startup. They’ve been around for more than three years and have tens of thousands of users. The majority of properties have between a few hundred and over 1,000 investors.
You will complete the relevant legal agreements and receive an official share certificate for each property you participate in when you invest with addy.
Can you make money with addy?
Yes! With addy, you can make money. That is, after all, the whole idea of investing!
You can make money with addy invest on the assets you invest in one of two ways (the specifics vary each property):
- rental income
- profits from the sale
If the property you invest in has tenants, you’ll probably get rental revenue proportional to the number of shares you hold, paid out to your addy wallet on a yearly or quarterly basis (depending on the property). You have the option of taking this money as income or reinvesting it in new addy homes.
Every addy real estate investment has the intention of being sold for a profit at the conclusion of the term (for example, 3 years). You will receive a dividend according to the amount of shares you own when the property you invested in sells. Hopefully, this includes your initial investment as well as a nice profit!
Pros of investing with addy
Investing with addy has a number of distinct advantages. The following are some of the advantages of investing with Addy:
1. Invest directly in commercial and residential real estate projects across Canada.
The ability to diversify your investing portfolio into real estate is undoubtedly the most appealing aspect of addy. You may already be priced out of the Canadian real estate market if you live in a major city. Addy has a new option for you to get involved!
2. Invest with as little as $1.
The fact that you don’t need a lot of money to get started with addy invest is a significant plus. One share in a property can be purchased for $1, and that can be your whole investment! If you do not have a lot of cash on hand, addy provides an incredible opportunity to enter the real estate market with no cost barrier.
Earn passive income.
Addy receives rental and lease payments since it invests directly in real estate, primarily in properties with established tenants. You are entitled to any additional cash flow based on the number of shares you own as an investor in these assets. The property I invested in said that I would be paid my rental revenue annually, although different properties may have different payment schedules. I intend to reinvest the revenue generated by my addy investments in additional addy properties in order to construct a diverse real estate portfolio and a sustainable passive income stream.
3. Potentially very high returns.
Canada’s real estate industry is booming, especially in Ontario and British Columbia, where addy largely invests. Addy forecasts annual returns of 10% to 20% and a total return of 30% to 50% on your investment. These returns aren’t guaranteed, but given how well real estate has performed in Canada in the past, they’re not out of the question.
4. It’s fun!
I wasn’t sure what the advantage of investing with addy over a REIT was at first, but once I got started, I realized it’s a lot of fun. Investing with addy is a lot more interactive than investing in a REIT. Even though the $1,500 limit means you can’t put much money into each property, you can be picky about which addy homes you add to your portfolio. If you have more than $1,500 to invest, you can buy numerous houses!
Cons of investing with addy
There are lots of pros to investing with addy, but there are some downsides to consider as well. Here are the cons of investing with addy:
1. There is a $1,500 maximum per investment property.
One of the major drawbacks of using Addy is that you can only spend $1,500 in a single property. You may not perceive this as a disadvantage depending on your risk tolerance and cash position as an investor, but I think it’s a disappointment. Even if I invest in a property that doubles my money, I will only get a few hundred dollars.
2. Your investment is highly illiquid.
Another disadvantage of addy is that your money is locked up for years in the property you choose. It has even less liquidity than a GIC. For whatever reason, you are unable to sell your shares and withdraw your funds. When I first invested with addy, they made it plain that they had no plans to sell for at least three years, which meant my money would be locked up for that time. However, real estate is a long-term investment, so purchasing now and selling tomorrow won’t guarantee you a profit.
3. Not many properties available at once.
Because only one property was available to invest in when I first started my account with addy, I only invested in that one. The stock was flying off the shelves! I put my money down, and the property’s shares were all sold within 48 hours. Another was advertised as “coming soon,” but was not yet available, resulting in a period when there was nothing to invest in on Addy.
4. You can lose your investment.
Returns on addy are not guaranteed, just like any other investment. In reality, you can’t count on getting your money back. Make sure you understand that you could lose your entire investment in the property you choose to invest in with addy before you put money in.
5. Only available to BC, Alberta, and Ontario residents.
Finally, and perhaps most importantly, addy is only available to residents of British Columbia, Alberta, and Ontario at this time. You cannot invest with addy until you are a resident of one of these provinces. However, once a province has enough demand, it will be unlocked.
addy vs REIT (Real Estate Investment Trust)
Many people are confused about how an addy differs from a REIT, which is another way to invest in real estate with a small amount of money.
REITs (Real Estate Investment Trusts) are a popular alternative for investors to invest in real estate without having to buy the property themselves. You can invest in REITs by purchasing stock exchange-traded shares. To tax-shelter your investment, you can hold these shares in a registered account such as a TFSA or an RRSP. In addition, most REITs pay dividends, which are normally paid monthly, making them ideal sources of passive income.
Although addy and REITs have some parallels in that they both make real estate available to investors, they function in quite distinct ways. Here’s how addy and REIT stack up:
Unlike a REIT, addy is focused on identifying investment opportunities with specific properties (e.g. you know the address). The homes you invest in are ones that you can drive by and inspect. You are not investing in a portfolio of unidentified properties; these are assets that YOU have chosen. They are also not a broker; rather, they invest with you. Addy owns each property they sell on the site, allowing them to partake in the risks and gains.
Returns on addys are neither guaranteed nor predictable. But that’s part of the appeal of real estate investing!
The amount of return you can expect from addy is determined by the properties you choose to invest in. Both ROI and IRR projections are available for properties listed on addy.
Internal Rate of Return (IRR) is an acronym for Internal Rate of Return. When cash flows change from year to year, as they do in real estate, it allows you to compute a rate of return on your investment. It is preferable to have a higher rate of return. The majority of the properties listed on addy have IRRs ranging from 5% to 13%.
The term “rate of return” refers to how much money you get for your money. It refers to the entire return on your initial investment, which includes both capital gains and cash dividends. The larger the return on investment, the better. The projected ROI for addy properties is shown to be between 30 and 50 percent.
Addy investments are purchased with the intention of being sold. Once Addy completes the upgrades, the homes you are investing in will be resold.
Some of the properties on Addy are available for rent or lease. The payout schedule for these properties is usually quarterly or annual, and it is mentioned on addy. There is no guarantee that these payments will be made.
If there is no payout schedule specified for a property, investors will be paid out when the property is sold. Addy will offer you an estimate of how long it will take, which is usually 3 to 5 years, but this is not guaranteed.
Your addy returns are taxable
You must pay income taxes on any and all addy returns since you cannot tax-shelter your shares of a property in a TFSA or RRSP account.
While this cost will likely be insignificant per property because you cannot invest more than $1,500 in an addy property at a time, it is something you should be aware of and factor into your calculations when calculating the ROI you will get on each!
My addy portfolio
I had only recently joined Addy Invest, and there was only one property available at the time. I invested $220 in an apartment development in Kimberley, BC, by purchasing 220 shares.
The investment will be made over a three-year period. For my investment, I will receive $12 per year transferred to my addy account, followed by a dividend for capital appreciation proportional to my shares when the property is sold. In the meantime, there’s nothing I can do but wait!
I intend to invest in further addy properties. I’ll put $100 to $250 into my addy account each month and buy shares in available properties according to on how attractive they are to me! Any profit I make from my addy investments will be reinvested in other addy properties.
I’m a renter with all of my money invested in the stock market and cryptocurrency, therefore I’m looking forward to using addy to obtain diverse exposure to real estate across Canada!