crowdfunding

Supporting B1G1 through educational initiatives

Media, Press Release /

South Africa, Cape Town. Global Wealth Group and Wealth Migrate promotes education as the way to help close the global wealth gap. Through fundraising on SEEDRS, the business joined B1G1 this year as part of its corporate social investment (CSI) goals. Founded on this simple idea in 2007, “What if every business could make a difference in their own way, just by doing what they normally do?”, B1G1 has now become a global movement. It has created a network of businesses that contributes to good societal causes with over 500 high-impact projects. 

With eight categories of projects from the environment to health or shelter and food, Global Wealth Group chose its main cause as education. SEEDRS investors are giving back to the global communities by associating with B1G1, which has multiple projects that uplift children’s lives and provide educational services to communities that are in need.  

Scott Picken values this CSI initiative and as the founder and Chief Executive Officer of Global Wealth Group he believes, “Quality education is one of the most powerful and proven vehicles to achieve sustainable development. It improves health and livelihoods, as well as contributes to social stability. That is why quality education is one of our global goals.” 

As per their benefits sheet, The Global Wealth Group and Wealth Migrate will donate a certain number of days to the education of children across the world based on the amount of investment they receive. Together they have pledged to pay at the end of the Seedrs raise. They are also able to send each investor that contributes a certificate detailing how many days of education they have gifted through this campaign. At the end of the raise B1G1 will issue the Global Wealth Group with a certificate with the number of days contributed to education, the total amount donated along with their gifting story.  

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How you should invest in commercial real estate: Crowdfunding vs REITS

Investing, Real Estate, Uncategorized /

At Wealth Migrate we believe in our offering and helping our investors navigate the world of real estate assets. To this end, we’ve examined the fundamental differences between crowdfunded and real estate investment trusts (REITS) assets, as this is a commonly asked question of which investment vehicle is better.

With real estate being one of the biggest asset classes globally and a trusted method for profitable investment, most investors are keen to invest.[1] This becomes tricky when considering which route is best and how you should invest in real estate.

What crowdfunding and REITs entails

Whenever real estate investing is discussed, there are different investment options for investors, two of the most popular methods are crowdfunding and real estate investment trusts (REITS).[2] Although both are invested in real estate, there are some fundamental differences between the two that range from liquidity, to risks, tax consequences, and barriers to entry.[3]

The key differences for both investment methods:[4]

  • A REIT is a company that owns and operates income-producing real estate. 
  • Typically, REITS are spread out over a portfolio of properties in a single asset class. 
  • Crowdfunding real estate is when a group of investors are purchasing one property and pool together their money to purchase it.
  • For crowdfunding there are only one or a few properties that the investor is invested in, and usually only accredited investors are allowed to invest.

Liquid

REITS are highly liquid, meaning that they can be bought and sold easily, so if an investor needs money, this is a convenient method of investment.[5] The same cannot be said for an investor that has a share in crowdfunded real estate that wants to sell it off quickly. Shares in a crowdfunded real estate are not transferable and the money is only received at the sale of the project or during refinancing.[6]

Risks

REITS offer a steady income that comes with the costs of having lower returns.[7] In this regard, there are REITS costs for covering the operation of the REITS and other expenses that are incurred before the investor is paid. On the other hand, crowdfunded real estate has more inherited risks because it is a single project and the equity partners in a deal.[8] As a result, the income is not as predictable, and the returns can vary from the predicted figures.

Tax consequences

REITS are considered paper assets, with the taxation different to investing directly in real estate as a partner. REITS can be purchased with tax-deferred retirement accounts, but the dividends from REITS are taxed as ordinary income.[9] Investing in real estate directly allows investors to be considered as partners and take advantage of tax-benefits such as depreciation, this allows investors to receive tax credits to reduce their taxes.[10]

Barriers to entry between REITS and crowdfunded real estate

Purchasing REITS is like buying a share in a stock where an investor can buy as much as desired with no minimum investment amount.[11] On the other hand, crowdfunding real estate has specific requirements for a minimum investment,[12] and this needs to be considered by investors that accept and understand the nature of these investments, before investing.

With all these factors to consider, it’s important that when you invest you understand the strategy and risks between REITS vs crowdfunded real estate. Both are attractive options, but your decision will depend upon your personal preference and your level of investment.

[1] Picken, S. (2019). ”Direct Real Estate Investing vs REITs vs Syndication vs Crowdfunding vs Collaborative SMART InvestingTM”. Retrieved by Scott Picken.
[2] Bryant, S. (April 2021). ”REITs vs. Real Estate Crowdfunding”. Retrieved by Investopedia.
[3] Frankel, M. (April 2021). ” Where to Invest: Real Estate Crowdfunding vs REITs”. Retrieved by Millionacres.
[4] Bryant, S. (April 2021). ”REITs vs. Real Estate Crowdfunding”. Retrieved by Investopedia.
[5] Benson, A. (May 2021). ” Real Estate Crowdfunding: what to consider”. Retrieved by NerdWallet.
[6] Picken, S. (2019). ”Direct Real Estate Investing vs REITs vs Syndication vs Crowdfunding vs Collaborative SMART InvestingTM”. Retrieved by Scott Picken.
[7] Picken, S. (2019). ”Direct Real Estate Investing vs REITs vs Syndication vs Crowdfunding vs Collaborative SMART InvestingTM”. Retrieved by Scott Picken.
[8] Frankel, M. (April 2021). ” Where to Invest: Real Estate Crowdfunding vs REITs”. Retrieved by Millionacres.
[9] Benson, A. (May 2021). ” Real Estate Crowdfunding: what to consider”. Retrieved by NerdWallet.
[10] Frankel, M. (April 2021). ” Where to Invest: Real Estate Crowdfunding vs REITs”. Retrieved by Millionacres.
[11] Benson, A. (May 2021). ” Real Estate Crowdfunding: what to consider”. Retrieved by NerdWallet.
[12] Bryant, S. (April 2021). ”REITs vs. Real Estate Crowdfunding”. Retrieved by Investopedia.

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The crowdfunding effect on property investment in South Africa

Blog, Investing, Investing, Investor Basics, Uncategorized /

With the popularity of crowdfunding property investments growing in following, South Africans now have the option to crowdfund their real estate investments through Wealth Migrate. It’s Chief Investment Officer Riaan van der Vyver, voices his opinion on why this is an ideal scenario for local investors.

Wealth Migrate’s category one licence is a game-changer

Just as crowdfunding relies on the spirit of collaboration, this is also necessary for it to become a successful solution in South Africa. Local investors will now benefit from Private Global Wealth holding a category one crowdsourcing licence from the Financial Services Conduct Authority, as this allows the company ‘’to provide its crowdfunding offering on an intermediary services basis using shares as a financial product category.” [1]

“For many early adopters of crowdfunding in Africa, particularly those using crowdfunding to raise equity, self-regulation is a challenge and an opportunity.” [2]

The real benefit to South African investors

Investors have access to a legitimate and credible ‘’funding channel for asset classes’’ through Wealth Migrate.[3] Once a sponsor passes the due diligence, a deal is put onto the platform’s marketplace, and the company takes on the responsibility of co-raising capital on the deal, with all details disclosed in full on the marketplace. 

Van der Vyver highlighted that this crowdfunding method is for unlisted real estate in any alternative asset class, which makes Wealth Migrate’s role as an institutional investor easier for lowering costs and providing better transparency of deals.[4] This is enabled through a special purpose vehicle (SPV) such as a structured note.

Crowdfunding: a future-forward opportunity

The main challenge with crowdfunding real estate is the model and structure of administrative fees, as this typically ranges from 2.5%-10% and may not include the actual transaction fee.[5] Globally since 2010, the crowdfunding equity market has become increasingly appealing to individuals who want to grow their wealth but lack sufficient capital to invest without the power of a group fund.[6] More and more, investors are also looking to diversify their asset portfolios while making use of convenient online websites or apps.[7]

[1] CNBC Africa. (May 2021). ‘FSCA grants Wealth Migrate licence to offer crowdfunding services’. Retrieved from CNBC Africa.
[2] Parker, D. (October 2019). ‘Crowdfunding on the rise in Africa’. Retrieved from Creamer Media
[3] CNBC Africa. (May 2021). ‘FSCA grants Wealth Migrate licence to offer crowdfunding services’. Retrieved from CNBC Africa.
[4] CNBC Africa. (May 2021). ‘FSCA grants Wealth Migrate licence to offer crowdfunding services’. Retrieved from CNBC Africa.
[5] Shneor, R., Zhao, L., and Flåten, B. (2020). ‘Advances in crowdfunding: research and practice’. Retrieved from Palgrave MacMillan.
[6] Raymond, R. (2015). ‘Six things you need to know about crowdfunding in developing countries’. Retrieved from World Bank Blogs.
[7] Shneor, R., Zhao, L., and Flåten, B. (2020). ‘Advances in crowdfunding: research and practice’. Retrieved from Palgrave MacMillan.

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