Real estate crowdfunding: How everyday Arizonans can invest in apartment complexes
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Venture on Colter is Neighborhood Venture's latest crowdfunded investment opportunity. Photo: Courtesy of Neighborhood Ventures
For $5,000, Arizona residents can become investors in a west Phoenix apartment complex.
Why it matters: Neighborhood Ventures, Arizona's largest real estate crowdfunding company, aims to open up the often-profitable but hard-to-break-into world of real estate investing, CEO Jamison Manwaring told us.
- It's a win-win, he says. Allowing non-wealthy people to participate gives them an opportunity to diversify their investment portfolio and it allows smaller developers to expand their investor base.
The big picture: Neighborhood Ventures purchased its latest property, a 123-unit apartment complex near Grand Canyon University, for $13 million last month — at about a 30% discount.
- The previous owner had purchased the property at the height of the market in 2022 and spent about $2 million to renovate it but ended up in foreclosure after interest rates surged, Manwaring said.
- Neighborhood Venture plans to bring in its own operations team, lease up the currently vacant units and then sell the complex in three years at a profit.
How it works: Arizona residents can become direct investors in the west Phoenix property, dubbed Venture on Colter, or invest in Neighborhood Venture's new opportunistic fund, which will support Venture on Colter and five to 10 other distressed properties the company plans to acquire, stabilize and sell over the next four years.
- Either option requires a minimum $5,000 investment.
- Neighborhood Ventures anticipates a 12% annual return for direct investors and a 16-20% yearly return for participants of the fund.
Catch up quick: In 2015, the state legislature passed a crowdfunding law, opening the door for companies like Neighborhood Ventures to court financial contributions from everyday Arizonans.
- The law was amended in 2018 to allow local companies to crowdfund up to $5 million from unaccredited (or non-professional) investors per year.
The intrigue: Neighborhood Ventures has acquired more than a dozen properties since its 2017 launch, including seven already resold at a profit for investors.
- Because the apartment complexes the company purchases are often distressed, Manwaring said there's also an immediate positive impact on the surrounding neighborhood when they renovate or lease up a property.