As a teenager, I was thrilled to open my own bank account—not so that I could spend, but so that I could save. When I graduated from college, the first thing I did was buy real estate: a humble apartment suite in Vancouver, where I would work as a journalist and editor for nearly a decade. Young though I was, real estate struck me back then as one of the most important assets a citizen can possess for themselves.
Hindsight suggests that I was correct. My property value increased annually, I had a stable environment to live in and work from, and I never had to pay rent to someone else. No regrets there.
While I no longer live in Vancouver, the lessons of real estate stuck with me. Which is why it was so cool to see a Vancouver startup bring real estate investing to my new home.
I am referring to addy, an emerging investment property for real estate investment opportunities. The Vancouver-based company officially launched in the summer of 2020, promising homeownership for as little as one dollar. No, you can’t live in a home for that price, but it’s as low a barrier to entry to real estate investing as we’ve seen.
Building on a Solid Foundation
“Quality real estate opportunities are usually out of reach for everyday people and it is getting worse,” Michael Stephenson, the CEO of addy, observed last year. “We believe everyone should have the opportunity to own property with access to real estate investing at any amount, regardless of income, age, or other conflicts.”
Indeed, accessibility is top of mind for this BC startup—initially the company charged zero fees. Today, addy offers membership tiers. True to their nature, the most affordable membership option starts at just one dollar.
“Real estate is a very lucrative asset class that very few people have access to, and that’s not fair,” Stephenson elaborated. “To generate wealth, you need a diverse portfolio, but not everyone can access real estate because the barrier-to-entry is so high.”
Addy may be a startup, but the brains behind are seasoned in the sport. Stephenson’s cofounder is Stephen Jagger, an equally prolific entrepreneur. In fact, much of their success they owe to each other: the pair have formed a dream team for two decades now, having sold off successful technology startups in 2006 and 2013.
Given the solid core forming addy, it should come as no surprise that their Advisory Board is headed by heavy hitter Jeff Booth, cofounder of BuildDirect, while Directors include Steve Evans, CEO of Sunstone Realty Advisors and Pascal Spothelfer, CEO of Genome BC and past President of the BC Tech Association. Thuan Pham, former Chief Technology Officer of Uber, is another board member.
The team is strong but not what impressed me first. In fact, I discovered addy in a suburb one hour outside of Vancouver in 2020, where the company was hustling just its second property—a brand-new Starbucks location in an emerging neighbourhood of the small but rapidly growing city of Chilliwack.
As someone recently coming from Vancouver, it was cool to see Jagger and Stephenson back in town with perhaps their greatest startup idea yet. Through addy I could invest in a business I drive by often, order coffee from myself, and know is busy and well-managed.
“The tenant has solid financial strength,” Evans noted of Starbucks at the time. “The building has a great location and a well-designed and very functional drive-thru.”
As a patron, I knew this all to be true. And as a longtime investor in real estate assets, it was fun to see something new on the market. Thus I made my first investment with addy, becoming an inadvertent but excited early adopter.
The Experience of Investing with Addy
Technology has come a long way, and I became a part-owner of my local Starbucks from the convenience of my phone; an entirely virtual signup process, from identification to funding to signing the contracts.
Each quarter, a report details how my initial investment is being spent, while I tuck a bit of the business’ cash flow back into my pocket via dividend-style distribution. While the initial investments are locked for a term (five years is common, but it varies by property), distributions are cash that can be withdrawn to your bank or applied to another property. Should an appreciated property sell during or at end of term, capital gains may also be realized by the investor.
The platform has thus far listed both residential and commercial properties, typically valued around $5 million and sometimes much more. The company looks to break down larger developments—think an entire apartment complex, not one single-family house—into $1 slices, according to Jagger.
“At addy we are working to eliminate barriers to entry and enable every human to be a homeowner,” Jagger explained to me.
Those wanting a bigger slice of the pie may be somewhat disappointed. The maximum amount you can invest in each property is capped at $1,500. There’s a reason for that.
“Without the maximum, it would be possible for a few people to take down the entire allotment, leaving nothing for everyone else,” the company explains on their blog. “Investment opportunities for people with large amounts of money already exist and we’re not in the business of helping the rich get richer.”
As a result, hundreds or even thousands of Canadians can jointly invest in a property. My Starbucks property saw more than 800 investors participate. My second investment, a commercial development in Calgary, saw more than 1,100 fellow Canadians purchase slices. Addy ensures there is always a crowd in crowdfunding.
As for how addy picks properties, it’s less about the type—say, residential versus commercial—and more about the value a property can deliver to its investors. According to Jagger, even industrial and logistical properties are on the table. Indeed, addy’s acquisition team keeps their eyes on all possible prizes.
“We are not tied to any particular type of real estate deal so long as it can get through our rigorous due diligence process,” Jagger says.
Part of addy’s evaluation process includes determining the risk profile of a property. The company aims to offer a range of risk across their opportunities to satisfy a broad range of potential investors.
Every property available through addy is different, of course. Therefore each one has its own anticipated rate of return, its own distribution schedule, and a label of one of four risk categories, which addy describes as their Risk & Return Spectrum.
The spectrum starts at Core, which are conservative investments looking to generate stable income with low risk. (My Starbucks investment falls under this category.) Core Plus is the next step, with moderate risk and more upside. On the riskier side of the spectrum is Value-Add, for investors willing to take on more risk—and wait longer—to achieve higher returns. (My business park in Alberta falls under this category.) And at the far end lies Opportunistic. These properties bear the most risk but also the highest potential for future cash flow and capital appreciation.
What addy offers is similar to other investment vehicles, such as Real Estate Investment Trusts through Exchange-Traded Funds: an opportunity for everyday investors to own a share of valuable real estate assets. However, Jagger points out that addy empowers investors with more choice than a REIT can offer.
“The properties you invest in are ones you can drive by and take a look at,” he notes. “You are not investing in a collection of unknown properties—these are properties you pick.”
This does not mean that addy properties are guaranteed to out-perform REITs or any other real estate investment vehicle for that matter. But what Jagger says is true. It’s a more tangible and therefore more exciting investment.
When I drive by the Starbucks building I own a part of, I feel—well, more invested.
The Final Word… Must Wait
Overall, addy brings a new and interesting option to real estate investing. It is too soon, however, to tell how well their investments will perform over the long term.
The startup is just now gathering some wind beneath its wings. So it may be a reach to say anything groundbreaking is occurring… yet. But here is a good team working on a good concept. Thus my expectations for addy are high.
With patience and excitement, I intend to keep an eye on the company’s evolution. And as an investor in three properties already, I’ll surely be considering their future releases to further bolster my portfolio.