Crowd-Sourcing Real Estate Investment in Canada

[Copes]

Original Thread: http://forum.skyscraperpage.com/showthread.php?t=202524

Guys, I have a grand total of one business law course under my belt, and have very little knowledge of whether or not something like this is possible. I want to direct your attention to the following article, which is the article that the original thread in the "Cities Discussion" section is about.

"The Real Estate Deal that could Change the Future of Everything"
http://www.theatlanticcities.com/nei...erything/3897/

Essentially, the notion is selling "shares" of a building to members of the community, and as a group, renovating and creating a business. Profits from the business, as well as from rent and the buildings long term price appreciation are shared amongst the shareholders.

I found this article incredibly interesting, and very exciting. My question is simply, could something like this be done in Canada? How would it be done? Has it been done?

I don't see why it couldn't, but maybe a lawyer among us could correct me.

[khabibulin]

Check out this place:

Mondragon's internal structure, inspired by the participatory economic model, is part of a long tradition of workers' collectives. It aspires to complete non-hierarchy: there are no owners or managers other than the workers themselves

http://en.wikipedia.org/wiki/Mondrag...26_Coffeehouse

Originally Posted by Copes

Original Thread: http://forum.skyscraperpage.com/showthread.php?t=202524

Guys, I have a grand total of one business law course under my belt, and have very little knowledge of whether or not something like this is possible. I want to direct your attention to the following article, which is the article that the original thread in the "Cities Discussion" section is about.

"The Real Estate Deal that could Change the Future of Everything"
http://www.theatlanticcities.com/nei...erything/3897/

Essentially, the notion is selling "shares" of a building to members of the community, and as a group, renovating and creating a business. Profits from the business, as well as from rent and the buildings long term price appreciation are shared amongst the shareholders.

I found this article incredibly interesting, and very exciting. My question is simply, could something like this be done in Canada? How would it be done? Has it been done?

I don't see why it couldn't, but maybe a lawyer among us could correct me.

[Xelebes]

Co-ops are allowed in Canada. I do not know if that qualifies as an answer for what is being asked.

[jlousa]

Unless I'm missing something wouldn't your standard REIT do what you're asking?

[Copes]

Originally Posted by jlousa

Unless I'm missing something wouldn't your standard REIT do what you're asking?

I thought of a REIT as well, but considering the U.S. as REITs and this was not the method used, I assume the answer would be no. These guys invested hundreds of thousands of dollars into figuring out how successfully do what they did in the United States, and if it was as easy as a REIT I feel like it wouldn't have taken nearly as much time and money.

Maybe my grasp on REITs isn't strong enough, but I would assume that because the investors were not investing in a trust structured like a corporation, and were instead literally buying a share of the piece of property, it didn't work. The other "business" that used the same method of crowd-sourcing as the brothers in the article used for their building, was a play that a group bought shares in as a method of funding.

In short, based on the article, I am under the impression that a REIT would not work. I could be wrong though, given my minimal understanding of REITs.

EDIT: I also believe that the brothers only sold 41% of their building (based on purchasing the property for $850,000 and selling 3500 shares values at $100 each), and in a REIT in the US no more than 50% of the shares can be held by 5 or fewer people.

EDIT 2:As well, I think the whole notion is of a smaller scale than a REIT. Its more aimed to be a way in which a community can come together and, as a group, purchase a building.