addy Review: Crowdfunding Real Estate

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If you’re looking for a way to invest in Canada’s overheated real estate market but find yourself priced out of your city, there’s an attractive alternative: addy.

addy lets you invest directly in commercial and residential real estate properties across Canada with as little as $1. This gives Canadian investors the opportunity to invest in real estate in a unique, fun, and affordable way.

addy Invest Review: what is addy?

addy is a fairly new company and only launched in 2018. It’s a real estate crowdfunding platform that lets investors buy shares in investment properties across Canada. Investors from BC, Alberta, and Ontario can invest any amount from $1 to $1,500 in institutional grade real estate such as multi-family property and commercial building properties across Canada.

Types of properties that have been available to investors on addy:

  • a commercial building with Starbucks as the tenant
  • a campground
  • apartment complexes

It costs $25 per year to be a member with addy, and you can pay this fee when you invest in your first property. Alternatively, when you sign up to the platform you can pay $500 for 5 years to become an addy “Believer”, which gives you a lifetime membership and a few “secret perks”.

Is addy invest legit?

Yes! addy invest is a real estate technology start-up based out of Vancouver. They have been operating for over 3 years and have hundreds of thousands of users. Most properties display anywhere from a few hundred to over 1,000 investors.

When you invest with addy, you will complete the required legal agreements and receive a formal share certificate for each property you invest in.

Can you make money with addy?

Yes! You can make money with addy. In fact, that’s the whole point of investing!

You can make money with addy invest on the properties you invest through two ways (the exact details are specific to each property):

  1. rental income
  2. profits from the sale

If the property you invest in has tenants, you’ll likely receive rental income proportional to the number of shares you own paid out on an annual or quarterly basis (again, property dependent) to your addy wallet. You can withdraw this cash as income, or re-invest it in more addy properties.

The intended goal of every addy real estate investment is to sell it for profit after the specified term (for example, 3 years). When the property you have invested in sells, you will receive a payout proportional to the number of shares you own. Hopefully this consists of your original investment plus a tidy profit!

Pros of investing with addy

There are many unique perks to investing with addy. Here are the pros of investing with addy:

Invest directly in commercial and residential real estate projects across Canada.

The biggest draw about addy is obviously the opportunity to diversify your investment portfolio into real estate. If you live in a major city, you may already be priced out of the Canadian real estate market. Addy offers a new way for you to buy in!

Invest with as little as $1.

The big draw of addy invest is you do not need a lot of money to get started. You can purchase 1 share in a property for $1, and that can be your entire 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.

Because addy invests directly in real estate, usually in properties that already have established tenants, it receives rental and lease payments. As an investor in these properties, you’re entitled to any additional cash flow based on the number of shares you own. The property I invested in noted that I would be paid my rental income annually, but they may have different payment schedules for different properties. I am planning to use the income I use from my addy investments to re-invest in more properties with addy to build a diversified real estate portfolio and create a reliable passive income stream.

Potentially very high returns.

Real estate is a hot market in Canada, particularly in Ontario and British Columbia where addy primarily invests. addy gives projections for returns on your investment that range from 10% to 20% per year, and an overall return of 30% to 50%. These returns are not guaranteed, but historically real estate in Canada has performed very well so they are not unrealistic either.

It’s fun!

At first I didn’t really understand the benefit of investing with addy vs a REIT, but once I started I realized: it’s really, really fun. Investing with addy is much more hands-on than investing in a REIT. Even though you cannot invest very much in each property because of the $1,500 limit, you do get to be selective about which addy properties you add to your portfolio. If you want to invest more than $1,500 you can invest in multiple properties!

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:

There is a $1,500 maximum per investment property.

One of the biggest downsides to investing with addy is you cannot put more than $1,500 in a single property. Depending on your risk tolerance and cash position as an investor, you may not see this as a downside but in my mind it’s a bummer. Even if a property I invest in doubles my money, I will only receive a few hundred dollars.

Your investment is highly illiquid.

Another major downside of addy is your money is locked up in the property you choose for years. It’s even more illiquid than a GIC. You cannot sell your shares and withdraw your cash for any reason. When I invested in my first property with addy, they were very clear there were no plans to sell for 3+ years, which means my money would be tied up for that entire time. Then again, real estate is a get rich slow game and so buying today and selling tomorrow wouldn’t mean you would make returns.

Not many properties available at once.

When I opened my account with addy, I only invested in one property because only one property was available to invest in. Shares were selling fast! I put my cash in and within 48 hours, all the shares in the property had been sold. Another was listed as “coming soon”, but not available yet, which created a period where there was nothing to invest in on addy.

You can lose your investment.

As with any investment, your returns through addy are not guaranteed. In fact, return of your principal isn’t guaranteed either. You can lose your entire investment in the property you choose to invest in with addy, so make sure you understand that before you put cash in.

Only available to BC, Alberta, and Ontario residents.

Finally, and what is currently possibly the most limiting aspect of addy is it is only available to residents of British Columbia, Alberta, and Ontario. If you’re not a resident of these provinces, you cannot yet invest with addy. However, once they get enough demand in a province they will unlock it. You can see where your province stands here: https://www.addyinvest.com/unlock-canada/

addy vs REIT (Real Estate Investment Trust)

Many people wonder how addy differs from a REIT, which is another way to invest in real estate with small amounts of cash.

Real Estate Investment Trusts (REITs) are a popular way for investors to take a position in real estate without actually purchasing property directly. You invest in REITs by buying shares that trade on the stock exchange. You can hold these shares in registered accounts like the TFSA or RRSP to tax-shelter your investment. Furthermore, most REITs pay dividends and usually on a monthly basis, making them excellent sources of passive income.

addy and REITs have some similarities in the sense they make real estate accessible to investors, but they are quite different in how they operate. Here’s how addy vs REIT compare:

addyREIT
Minimum investment$1price per share (~$25 to $40)
Maximum investment$1,500none
Commissions$0brokerage trading commissions ($5+)
Accounts (tax-shelter)UnregisteredTFSA, RRSP, RESP, Unregistered
Dividend scheduleAnnualMonthly
RiskHighLow to moderate
LiquidityLowHigh

addy, unlike a REIT is focused on creating investment opportunities with identifiable properties (e.g. you know the address). The properties you invest in are the ones you can drive by and take a look at. You are not investing in a collection of unknown properties – these are properties YOU PICK. Also, they are not a broker, they invest alongside you. addy maintains ownership of each property they sell on the platform so they share in the risks and the rewards.

addy returns

addy returns are not guaranteed or all that predictable. But that’s the fun of investing in real estate!

The return you can expect from addy depends on what properties you invest in. The projected returns of properties listed on addy are provided for both ROI and IRR.

IRR stands for Internal Rate of Return. It allows you to calculate a rate of return on your investment when cash flows differ year to year, as in the case of real estate. The higher the rate of return, the better. Most properties listed on addy display IRRs in the range of 5% to 13%.

ROI stands for Rate of Return. It is the total return on your initial investment, and includes both capital appreciation and cash payouts. The higher the ROI, the better. Projected ROI on addy properties are displayed as ranging from 30% to 50%.

addy investments are bought to be sold. The properties you are investing in will eventually be sold again once addy makes the improvements

Some of the properties on addy provide rental or lease payments. These properties typically have a quarterly or annual payout schedule, which is listed on addy. These payments are not guaranteed.

If a property does not have any payout schedule displayed, investors will be paid out at the time of sale of the property. addy will give you an estimate of the timeline, which is typically 3 to 5 years, but this is not guaranteed.

Your addy returns are taxable

One thing to note is because you cannot tax-shelter your shares of a property in a TFSA or RRSP account, you will pay income taxes on any and all addy returns.

While this amount will likely not be significant per property because you cannot invest more than $1,500 in an addy property at a time, it is something you must be aware of and must consider when calculating the ROI you will personally earn on each property!

My addy portfolio

I only just signed up for addy invest and there was only one property available when I did so. I purchased 220 shares (for a total investment of $220) in an apartment complex in Kimberley, BC.

The timeline for the investment is 3 years. I will receive $12/year paid to my addy account for my investment, then a payout for capital appreciation proportional to my shares at the time the property is sold. In the meantime, all I can do is wait!

I am planning to invest in more addy properties. I will deposit $100 to $250 per month to my addy account, and purchase shares in available properties based on how interesting I find them! I will also reinvest any income earned through my addy investments in more addy properties.

I’m a renter and all my cash is in the stock market and cryptocurrency, so I’m excited to get my diversified exposure to real estate across Canada through addy!

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2 Comments. Leave new

  • Arthur DuBois
    July 7, 2021 3:28 pm

    Thanks so much for sharing this review! I have come across a few similiar sites but had never heard of Addy. After reading this review, I think I’m going to check it out. There are so many benefits of investing in real estate but it can be one of the tougher assets to break into. I’ll be sure to follow along with your blog for future reviews

    Reply
  • Very informative and easy to follow article, Bridget.

    Thank you for doing it.

    One oversight if I’m not mistaken. In the segment ‘addy returns’
    ROI stands for Rate of Return or Return On Investment?

    If the latter, is it possible to correct this for those of us who have only a basic knowledge of this topic.

    Thanks again.

    Reply

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