SaundersDailey, a first-of-its-kind web platform by local real estate veteran Marshall Saunders and digital marketing whiz Jason Dailey, is empowering MSP locals to invest in the region’s accelerating real estate market — without actually moving into the properties they help build or buy.
Saunders’ and Dailey’s platform is the latest innovation in the equity crowdfunding space — an emerging financial sector, made legal by the sweeping federal JOBS Act of 2012, that allows people who meet certain financial requirements to make small but meaningful equity investments in a variety of asset classes.
“Equity crowdfunding appeals to investors who want to support promising ideas and assets,” as they would on classic crowdfunding platforms like Kickstarter, says Saunders. “The difference is that it allows investors to take an actual stake in the asset,” and, hopefully, see a return on their investment.
SaundersDailey officially debuted at a July 14 launch party in Minneapolis’ Kenwood neighborhood. The company began with a single investment opportunity: Residential Fund One, a bundle that includes more than a dozen residential properties throughout the region. “Residential Fund One is basically a local real estate mutual fund,” says Saunders.
According to Saunders, future investment opportunities — including some that should become available in the coming weeks — will focus on discrete properties, mostly multifamily residential buildings. Saunders cites a seven-unit building on Chicago Avenue in Minneapolis, currently part of Residential Fund One, as an ideal SaundersDailey property.
For now, SaundersDailey owns, or has under contract, most of the properties listed on the site. But in the future, SaundersDailey plans to serve as a sort of clearinghouse for property owners and developers looking to raise funds for their own investments.
The platform already has one listed property that it doesn’t directly own: a retirement community in New Ulm, Minnesota. The community’s owners pay SaundersDailey to use the site and put its offering in front of a growing cohort of MSP-based investors; Saunders is betting that this arrangement will appear increasingly attractive to property owners who might otherwise struggle to attract backers.
Saunders says SaundersDailey is developing a thorough vetting process for future third-party property listings. He sees SaundersDailey-owned properties representing the bulk of the company’s business for the foreseeable future, but estimates that third-party listings “could represent 20 to 25 percent of our revenue stream” over the medium to long term.
Most SaundersDailey properties, including third-party listings, are residential. “Residential is what I know best,” says Saunders, who cut his chops at the helm of RE/MAX Results, now Minnesota’s third-largest residential real estate brokerage. In the future, SaundersDailey may “dabble” in commercial real estate, but Saunders expects residential to remain the focus. And though Saunders doesn’t categorically rule out the possibility of expanding to other midwestern markets, he’s cautious about setting his sights too high, due both to stricter legal standards for interstate offerings and the simple fact that “every market is different.”
For MSP residents keen to own a piece of the region’s hot real estate market without actually buying a house or condo themselves, SaundersDailey has a big catch. By law, the platform can only accept investments from accredited investors — individuals who earn at least $200,000 per year (or married couples earning at least $300,000 per year) on a consistent basis, or individuals worth at least $1 million.
Saunders is optimistic that the laws restricting equity crowdfunding investments to accredited investors will change as the concept goes mainstream. He’s also hopeful that regulations made possible by the recently passed
MNvest legislation will ease the burden for non-accredited investors, though he estimates a year or more will pass before those regulations are ready.