4 min read
EquityRoots.com uses crowdfunding as a finance tool to raise capital for premium branded franchised hotels. We harness the buying power of the crowd to create investment opportunities in institutional grade assets that were once only available to REITs, insurance companies, and established players in the hospitality industry. Our crowdfunding technology allows even the smallest of investors to invest alongside professional real estate developers, hotel owners, and other like-minded investors. It’s a system in which everyday folks can tap into serious sources of capital for investment purposes. This capital can be structured as equity, debt, mezzanine debt, and sometimes even convertible debt – security instruments that are designed to yield a return for investing. There are plenty of advantages in crowdfunding investments. Here are just a few!
1. Diversifying Risk.
Hotel investors can diversify risk by investing in fractional interests in different hotels across the country. Hotel investors can select hotels under different brands in various states. Our EquityRoots platform allows investors to select multiple assets, and buy shares or investment units in different projects and properties, diversifying your investment risk by brand, by the market, by different geographic regions, or simply by the different types of hotels, whether it is an extended stay, limited service or full-service hotel.
2. Owning Pieces of Institutional Grade, High-Quality Developments.
Typical hoteliers and hospitality groups commonly pursue 80-120 room properties in secondary or tertiary markets. This is where barriers to entry are often less and construction costs are generally lower. However, in higher density urban markets such as Chicago and New York, hoteliers face much higher barriers to entry and construction costs are significantly higher. Consequently, many hospitality groups aren’t able to penetrate into those markets. Primary urban markets have institutional grade assets that typically cost $20-50 million and although they can take many years to develop, it’s worth the hassle. Institutional grade assets tend to have the highest average daily rates, highest occupancies, and strongest profit opportunities for their owners and investors. But because of their size and other barriers to entry, these deals sometimes become out-of-reach not just for everyday people, but also for proven hoteliers. This is where crowdfunding kicks in to provide leverage and opportunity that hotel investors otherwise would not have access to. By pooling capital from crowd, EquityRoots’ crowdfunding platform allows everyday folks to compete for higher-grade, higher-quality deals. Crowdfunding is now gaining access to deal flow usually reserved for institutional players like REITs and insurance companies, giving even new hotel investors a chance to enjoy the ownership of some of the most profitable opportunities.
3. No Middlemen and No Commissions.
The crowdfunding process is very simple and efficient. Under specific exceptions to the securities registration requirements, broker’s fees or commission fees for buying and selling the investment are not permissible. Crowdfunding aims to make every penny of your dollar count in the investment, instead of letting middlemen walk away with your money.
4. Local-Concrete Investments You Can See.
Investing in property and buildings that you can see and visit is yet another advantage. Hotel investments are different than paper stocks and bonds; paper certificates that we can never see and often trade on speculation. Real estate is an investment that you’ll always be able to see. It has real property interest and physical improvements on the land. A family can walk into a hotel, point to it, and feel a sense of ownership. It’s a more rewarding investment experience than collecting paper certificates in a file cabinet.