By Opportunity Zone Magazine Staff
New York’s EquityMultiple is bringing its crowd-funded real estate investment model to the Opportunity Zone space with a $2.4 million investment in an Arizona industrial complex.
EquityMultiple, which lets individual investors pool together to make real estate investments with just a few thousand dollars apiece, eyed more than 200 potential OZ deals before investing in the 325,000-square-foot, two-warehouse project in Goodyear, a city in the Phoenix metro area.
"This struck us as the first deal that came across our desks that made a lot of sense for us and for our investors,” EquityMultiple CIO Marious Sjulsen said.
The project is being developed by Chicago’s Baker Development Corp. at a total cost of $12.5 million, with construction expected to begin this quarter and be completed by early 2020.
The rapid buildout, and the prospect of strong cashflow within a relatively short timeline, was a key part of the project’s appeal, explains EquityMultiple VP of Marketing Soren Godbersen. “Because most OZ investments are ground-up developments, we felt like this was an appealing attribute, especially for investors with liquidity sensitivities,” he says.
A solid core investment was especially important since many of EquityMultiple’s investors are small-scale investors without the expertise and risk tolerance of institutional operators, Godbersen says.
“We’re still in the early innings of Opportunity Zone investing, especially with regards to individual investors participating. There’s a bit of education that needs to go on,” he says. “Some investors are rightly tentative and haven’t got their heads around what it means or whether a 10-year hold is right for them.”
Still, Godbersen adds, EquityMultiple is confident that OZ tax benefits will prove appealing to its clients; the firm plans to invest significant sums in other OZ projects in coming months.