Real Estate is the oldest and largest asset class in human history. You’d think it would be the most advanced asset class of all but for far too long, it’s been stuck in the dark ages. Traditionally, you need huge capital to afford the property itself and to cover its huge purchase costs. Not only that, you also need to have enough time and patience to tolerate bureaucratic goose chases with a dozen regulators and stakeholders to complete your real estate investing journey. Meanwhile, regular people can buy and sell shares, currencies, and crypto with the push of a button.
SmartCrowd saves its clients precious time and money. How? With a push of a button and as little as AED 2,000, you can become a property owner by pooling together funds with other real estate investors through our crowdfunding platform. So, how does investing with SmartCrowd compare to investing on your own?
Finding the Property
Purchasing real estate takes a lot of time. It can take weeks, if not months, to sort through all the paperwork and approvals required to buy, let alone maintain or even sell, a property.
First, you need to find a property. There are tens of thousands of properties available in the UAE real estate market today and they’re unique in their own way – whether its location, type, service-charges or risk profile. You’ve done the research but it’s taken a couple of weeks, if not months, since you’ve been busy with work, family or other investment opportunities.
Finding the right property with the right characteristics that can provide a great net yield is like finding a metal needle in a haystack. Thankfully, SmartCrowd has the magnet. Thanks to our proprietary data model, access to real time market data, and professional network of brokers and developers, we circumvent this by scouting properties for you in prime-areas that will appreciate in value in the long-run and have the desired features to generate a fantastic net yield.
Negotiating a Price
Great, you’ve found the property you’re looking for. Now you need to negotiate the terms of sale with the seller. Negotiating a price requires having extensive knowledge about the property, market trends and data to make sure you’re not getting ripped off. It’s like bargaining at the flea market; the seller will fight for every dirham to maximize their profit.
SmartCrowd takes care of this as our investment team has decades of experience and are dedicated to getting the best deal possible. We’re always looking for value and are aggressive in our negotiations to make sure our investors get the best deal possible. That’s why if you look at the properties on our platform, every one of them were sold to our investors at a discount to the independent valuation. With SmartCrowd, you’re always getting a bargain.
Raising the Funds
You’ve found the property and have just finished negotiating the price. At SmartCrowd, we’ve already completed these two steps and have provided our research and analysis reports to our clients at the time of listing.
Now, it’s time to raise funds to purchase the property. For many, this would mean either withdrawing from their savings or even taking a mortgage. That’s a huge commitment for a single piece of real estate. If you’re taking out a mortgage, you’re taking on debt to invest – so you’d have to end up using most, if not all, of your returns to pay out the debt. It doesn’t have to be this way.
With SmartCrowd, you and other investors pool as little as AED 2,000 to purchase the property at a discounted price. You then receive dividends based on your investment, allowing you to keep your returns without having to risk taking debt or sacrificing cash from your savings.
Covering Fees and Registration Processes
Alright, you’ve raised the funds but it doesn’t end there. Now, you have to pay additional costs for having the transaction to go through. You’ll have to pay an additional 2% and 4% of the property’s value to cover Agents fees and Dubai Land Department (DLD) fees, along with additional fees to cover DLD administration costs (AED 4,200) and Title Deed costs (AED 520) – along with a No Objection Certificate (NOC) from the developer to transfer ownership rights, which can cost up to AED 5,000. If you’re buying the property on a mortgage, you’d need additional approval for the mortgage from your bank and the DLD before you can apply for the sales agreement and NOC, respectively. Having to go across the city to the real estate agent, developer, and Dubai Land Department’s offices takes a lot of time and energy, on top of filling out all the required paperwork. This whole process can take weeks if not months.
SmartCrowd does all of the running around and paperwork for you. Once funds are deposited and investors are approved, we establish a DIFC registered Special Purpose Vehicle (SPV), which is a company registered in the DIFC for the sole purpose of purchasing the property. SPV shares are allocated based on your investment and will directly receive rental returns through it. We then approach the developer for NOC approval and register with the Dubai Land Department Trustee office to register the SPV with them and transfer ownership. This ensures that your ownership is registered and verified by both the DIFC and the DLD. This whole process takes us a maximum of two weeks to complete.
You Now Own the Property
Congratulations, you now own the property! However, it’s taken a couple of weeks/months. However, now it’s time to find a renter to actually generate returns. This could take a while depending on your property and there’s no guarantee you’ll find one immediately or be able to negotiate a worthwhile rental rate with them. Moreover, you’d need a property manager to manage the property, and that would mean more costs. Also, if you’re looking to sell, it would mean another round of finding buyers, negotiating with them and filling out more paperwork. And if the property you invested in isn’t performing well, this could take a while.
SmartCrowd always prioritizes finding properties with renters already in the property in order to generate immediate returns. We also have a network of RERA (Real Estate Regulatory Authority) approved property managers who have a track record of stellar service, ensuring the property’s long-term value is protected and is well taken care of. If you’re looking to sell your shares in the property, we let your fellow property investors buy up your shares or list them on our up-coming secondary market. Also, once a property investment reaches its 5-year investment horizon, our investors can vote to decide to sell or not. Buying, managing and selling real estate is as easy as ever with us.
The Risk Adjusted Return with SmartCrowd
Finally, you’ve completed the process of investing into a single property on your own. Whilst there may be a minor cost advantage to doing it on your own, it’s a long and difficult process to go from scouting to owning a property. For all the hassle that you need to go through just for a single property, SmartCrowd can do it for you and for multiple properties, at the push of a button with no effort required from your end. Moreover, if you invested AED 1,000,000 into a property on your own and spent the same amount on multiple properties on our platform, for as little as AED 2,000 per property, your risk adjusted return would be higher as you’re diversifying your portfolio for the same amount invested. You don’t need to risk everything on the success of a single property, you can have a diversified portfolio that can generate a guaranteed income, even if only one property isn’t performing as well as you’d liked. With SmartCrowd, you can build your property empire and have your money work for you, rather than the other way around.
Seems pretty tempting not to be on track with us already… So hurry up and register now!