SILICON VALLEY, CA. – As the saying goes about land, “God isn’t making any more of it.” Therefore, unless one were to factor in the colonization of the moon, the value of real estate is going to continue to increase. Home prices in Silicon Valley are truly astronomical, as are the property taxes. Everything has been developed to the extent that even cities like Hayward will eventually experience lucrative gentrification.
For many, the dream of home ownership took a drastic hit during the financial meltdown of 2008. How trillions of dollars could have been looted in the age of the NSA and other regulatory bodies almost defies human comprehension. The subprime mortgage meltdown still boggles the imagination. Yet it appears that fundamental changes have been enacted since the last debacle.
For example, men like Ben Givon have a new vision for real-estate investing. His website can be found here. His premise for a new real-estate investment paradigm is basically this – you can invest as little as $1,000 and receive shares in real-estate properties that pay out a slice of the dividend. (More on that below.) It’s possible that RealEstate Affiliates could work, since it involves crowdfunding principles that spread around the inherent risk.
Why is Givon’s idea so maverick? Let’s take a step back and look at the broad strategic architecture of the real-estate investment game. One of the important changes coming to real estate involves the growth of artificial intelligence. AI is going to render about 50 percent of all of the jobs that exist in the United States today obsolete by 2030 A.D. That’s going to mean the closure of many buildings and office spaces. And that also means there’s going to be a lot of commercial real-estate properties hitting the market in the future.
Yahoo! published a recent article discussing billionaire Mark Cuban’s views on this coming trend. You can read the article here.
“It’s not a question of how it plays out over 100 years. It’s a question of how plays out over 10 years, 20 years, right? Who knows what exactly? But I can tell you … which jobs are going to be displaced, I can tell you the real estate is going to be displaced. I’ve talked to major companies … asking me, ‘Mark, we’re going to have all this extra real estate in all these towns. What are we going to do with it? Do you have any ideas?'”
This is where a man like Givon enters the picture as a potential market disruptor. Asked how he came up with his unique idea, he explained to this writer that it’s merely, “a cure for a sick [real estate] market.”
“The real estate market [is valued in] the trillions. The sickness … is the high capital requirement making this market closed for most investors. The idea of RealEstate Affiliates is the cure – making this market accessible to anyone, anywhere.
“People want to invest in real estate, but they can’t since capital requirements too high, and a person needs a lot of expertise to find the right properties and price the assets. We find good properties with high returns from the global real estate market.”
Givon explained that like in any other investment, there is a risk and return. Many people are looking for a low-risk investment with a monthly return. Yet there are no real alternatives for this type of investment with bank interest rates at an all-time low. He added that he’s looking to offer the highest return in stable markets.
In terms of the importance of trust and integrity in his business model, Givon said: “In real estate, those features exist by default. That means for every property we can check the title deed and see who is the owner of the property. This is done so we can ensure we are buying the property from the real owner. And afterward to check that we are indeed the [new rightful] owners on the title deed. That means, if you bought a property, you have a certificate from the country where the real estate resides that shows you are the owner of the property.
“The funds of clients are being held by a trustee, usually a local law firm, that collects the investor funds and keeps them as a trust until the title deed is transferred to the new owner. Profits are collected each month to the investor’s account, and he [or she] can withdraw them to their bank account or credit card.”
If all of this sounds new, it’s because it is. In terms of his views on micro-lending, crowdfunding and new economic business models, Givon said: “The Internet changed our lives. It has, of course, changed the way we get our news, the way we do commerce and the way we communicate. This communication leap has made doing business much easier.
“Business models, funding models and investments have all evolved. Crowdfunding with platforms like Kickstarter, opened product funding for people who couldn’t fund their projects before the Internet. It doesn’t mean these platforms or business models are perfect, but as is the case with evolution, it takes time and experience to find the right formula.”
Givon said he looks at “the physical market.” He added: “If we are in a developing country with more uncertainty, the risk is higher and the return will be higher. For example: London vs. Rio de Janeiro. In London, it’s very hard to find a vacant property, as it’s a very mature market with a lot of certainty. On the other hand, in Rio … Brazil is a developing country, with a lot more vacant properties, so the market is immature. That means there is more risk in Brazil than in the U.K.; therefore, we expect higher returns.
“Added to that is the type of real estate – is it residential, offices, commercial, a hotel or logistics center? Each has its own risk factors, depending on the market. We use two non-biased appraisers to evaluate all properties. That’s because with real estate, like with doctors, it’s always better to have a second opinion.”
Perhaps Givon’s idea embodies the future of real estate – a new paradigm in which ordinary people, who have no chance to compete with the wealthy, finally get their opportunity to own a piece of the proverbial pie.