Mix real estate, natural resources, family office, and crowd investing into one conference? This sounds akin to a restaurant with too many chefs, like when sushi and burritos appear on the same menu. However, on June 19, 2014, in Newport Beach, California, The Real Estate, Natural Resources, Family Office and Crowd Investing Conference was held. The result? All the flavors fused together nicely. This entertaining and engaging event delivered easy introductions for both investors and investees, gobs of valuable content from knowledgeable panelists, a hands-on pitch workshop, and a cozy dinner to cap off the fruitful day.
The event was intimate, with maybe 60 or so attendees. The comfortable environment made meeting other participants easy. I promptly became friends with Jim Aldrich, the CEO of Prop Funds LP, a two-day old real estate crowdfunding platform. As we chatted, we discovered that we both began in real estate in the same year, 1990, and worked within two hundred yards of each other in Compton, California. My first real estate job was a loan originator for Univest Home Loans, located on Central Avenue on the south side of the 91 Freeway, while Aldrich worked as an industrial broker for Pacifica Capital Group on Central Avenue on the north side of the 91. I also met CP Pal, the CFO of Home Union, which offers "fully-managed single family rental investments" with the great tagline "You Invest, We Do The Rest." I even met the Google Adwords world record holder, Gene Anderson, of Advanced Online Technology. In 2008, Gene was the number one agent at Netbiz, which was the number one fastest growing adwords agency.
The "Real Estate Crowdfunding" panel featured Pal, Rishi Thakkar of Realty Mogul, Carlo Tabibi of Patch of Land, and Ridaa Murad of Christina Ventures. The moderators were David Drake, chairman of LDJ Capital and conference producer The Soho Loft, and Lance Miller, who has invested in several projects through multiple real estate crowdfunding platforms. Drake began with a forecast that real estate crowdfunding is set to explode in scale. The proliferation of platforms, close to 100 today from less than 10 a year ago, indicates that several platforms are jockeying for slices of this ever-growing pie. However, this is a nascent industry and no crowdfunded real estate deals have gone bad -- yet. Inevitably, one will go bad and a question was who is going to pick up the pieces? Tabibi stated that company capital may be infused to complete and market projects in default. Others indicated that platforms are likely to step in and manage a project through disposition in order to salvage investor dollars. Conservative underwriting plus the strength and track record of sponsors were proffered as mitigants to defaults. Drake opined that real estate crowdfunding represents such a small source of overall real estate capital, there is a sense that all the platforms are in this together. There was also talk of the pros and cons of raising capital at mid single digit yields in high-income areas such as Beverly Hills, Brentwood and Santa Monica versus chasing double digit returns in lower-income, but more volatile, neighborhoods. The consensus was that there room for all, but concern was shared that investors in the higher-return deals may not fully appreciate potential risks. Attracting foreign investment and utilizing a domestic entity in order to minimize the potential burden of tax withholding at the platform level was another discussion.
Other panels included "Investment Strategies", which featured Angel Investors, Venture Capitalists and Family Offices describing what they are seeking. Amir Banifatemi of K5 Ventures described how his firm typically gets involved in good ideas at the very early stages with an investment of $10,000 - 50,000, then coaches, nurtures and mentors the investees to success. He mentioned Curb Call, "Uber for real estate agents", as a recent promising investment. When a home buyer sees a property they like, they can summon a nearby agent on Curb Call's mobile app. The agent will show up, often in minutes, to show the home and potentially becomes the buyer's agent. This is lead generation with a slick hi-tech interface. Stephen Block, also of K5, shared that they expect to lose on many investments, but more than make up for the losses with big gains on the winners. Up next was "Quick Fire Introductions" in which everyone in room briefly introduced themselves and their goals for the conference. This proved helpful in identifying who participants should connect with one-on-one. "Natural Resources Crowdfunding Trends" rounded out the panels.
The "Pitching Workshop", led by Stephen Silver of SproutStart, was a highlight. Silver gave some helpful tips and examples, particularly on being concise and to the point with an ask. Drake offered that a good pitch is like a good article: start with your claim, prove it in the body and summarize at the end. He lamented that he sometimes sits through 20-minute pitches and still does not understand the presenter's business or what they are looking for. Participants were then invited to pitch the crowd. Aldrich from Prop Funds went first and gave a confident and compelling pitch. Constructive criticism then flowed from Silver, Drake and others in the room. I pitched the distressed mortgage investment opportunities offered through American Homeowner Preservation. The feedback was helpful: be more concise; do not highlight AHP's non-profit origins; and emphasize the win-win-win strategy, the high returns and the big discounts at which we buy the mortgages. Anderson, the Adwords record holder, gave a succinct and impactful pitch for Proffer, a site empowering prospective real estate buyers and tenants to proffer, or make preliminary offers, to buy or lease real estate. Craigslist, Loopnet and similar sites display details on properties available online, but then negotiations are typically completed off the websites via email and phone. Proffer will bring the back and forth negotiations online in an informal non-binding manner, which will likely speed up the time to reach final agreements. American Homeowner Preservation expects to list our REOs on Proffer.
After a few closing remarks from Drake, we all walked a few blocks to have dinner at the offices of K5, where a pitch competition was winding down. We enjoyed dinner and chatted with other conference participants. Here, I met Ari Gati of Bankless Times, which aims to "inform and protect consumers in the emerging world or alternative finance" through a news site featuring crowdfunding, peer-to-peer lending, bitcoin and other front line alternative finance topics.
The conference was worthwhile for investors and investees alike, and similar gatherings are planned for July 17 in San Mateo, California and September 23 in New York City. The event offered a veritable smorgasbord of introductions, valuable content, and hands-on learning, all wrapped up in an inspiring environment. Almost like a sushi burrito.