McCool had wanted to add commercial real estate to her portfolio, but “between the significant costs and not knowing anything about its management, I was intimidated,” she says. So when the 37-year-old owner of the Grande Prairie, Alberta day home saw an ad on social media for willowa company that sells condominiums in Canadian commercial properties, it jumped at the chance to enter the market.
McCool visited Willow’s website and inquired about the PropSharing Model, which allows investors to buy and sell shares of commercial property in the same way that stocks are traded. Willow buys the properties and divides them each into 100,000 property units, which are sold on her digital platform.
What McCool likes is that it can invest in different markets across the country and have professionals take care of the day-to-day maintenance and tenant management. She also likes the flexibility of choosing properties as they become available, as well as “being able to buy a little or a lot”, depending on her opinion of what’s on offer.
Currently, Willow is selling shares in two properties, one in Toronto and one in Ottawa. McCool bought 40 shares, for a total investment of about $850. “When the properties sell in 10 years, then I will see a return,” she says. In the meantime, the co-ownership with Willow requires no annual maintenance fees (like a timeshare would), and McCool’s money earns a higher return than it likely would in a savings account.
A new way to invest in real estate
Investing in commercial real estate can be prohibitively expensive for individuals. In addition to a large down payment, buyers also need capital for repairs, renovations and mortgage payments. Until recently, however, the most accessible option for investors interested in commercial properties was to buy shares in real estate investment trusts (REITs), which hold portfolios of income-generating properties such as apartment buildings. apartments, warehouses and shopping malls.
Many REITs are traded on exchanges like stocks. This is a convenient option, but it can be volatile and incur high management fees. Also, investors have no say in the properties held by a REIT. Some REITs are private and only available to institutional and accredited (high net worth) investors.
Before launching Willow, CEO Logan Yergens had been considering buying real estate together for several years. With commercial real estate being so exclusive, he kept thinking, “How do you make this accessible to the general population?”
Three years ago, in the same way that online brokers made investing in stocks easier, Yergens and his team launched Willow to make it easier to buy and sell commercial real estate stocks. “For ordinary Canadians, the opportunity to buy commercial property is so out of reach,” he says. So far.