(CROWDFUNDINGANDOTHER OFF-MARKETINVESTMENTS)

For investors who don’t want to venture into the public markets, but don’t have the funds or the forbearance to buy their own land, there is a growing number of private funds to invest in. Each has its own investment criteria and upfront financial requirement. For example, Whitetail Capital Corp. is a Toronto-based private-equity firm that buys distressed real estate with a current focus on the U.S. Midwest, including cities such as Chicago. The fund is open to accredited investors, and typically requires a minimum investment of $150,000. “Most of the guys we have are real estate investors who have a lot of exposure to Canada,” and are looking for opportunities in the U.S., where they see more upside, says Whitetail co-founder and managing partner Ryan Smith.

Investors with less money in their pockets are also considering crowdfunding through firms such as Optimize Capital Markets, where the minimum investment is $25,000, though it can increase to about $150,000. “Real estate is becoming one of the more active sectors,” says CEO and president Matthew McGrath, whose company also raises funds for sectors such as technology and life sciences. “We are a nice bridge between the individual investors… and real estate groups in need of this type of investment capital.”

There are also a number of private funds where investments are based more on who you know, rather than how much you can put down. An example is B.C.- based Diverse Properties Ltd., which invests in residential and commercial real estate in Western Canada. It has a select group of about 30 high-net-worth investors, including doctors, lawyers, farmers and business people, who are friends and family or their referrals. Each has put in a minimum of $150,000. “We are pretty selective with who we have as investors,” says managing partner P.L. Meindertsma. The goal is to work with a team of investors who know each other and share similar investment values. “There’s a lot of money out there, but people are nervous about where to put it,” he says. “Trust is a huge part” of investing.

About 90% of Meindertsma’s personal investments are in real estate and the rest is in stocks, which he says is just enough to force him to stay on top of the public markets. “Some people make a lot of money in the stock market. I don’t have the time, motivation or desire to follow fund managers and internal changes at companies. I don’t understand that,” he says. “I don’t know anything as predictable as real estate over time.”