Real estate is expensive, and it’s only getting pricier.
In its latest report, the Toronto Regional Real Estate Board said that it expects home prices in the Greater Toronto Area to rise another 12 per cent this year to an average $1,225,000. Meanwhile, in Metro Vancouver, the benchmark price for all residential properties reached $1,255,200 in January, up 18.5 per cent from a year ago. For anyone looking to buy into the real estate market as an investment, rising prices sure aren’t making it easier.
BuyProperly is a Toronto-based investment marketplace that lets users build wealth in real estate starting from $2,500. Founder and CEO Khushboo Jha, who previously worked for tech giants like Amazon and Accenture, created the company after finding a lack of options when it comes to buying real estate.
After starting in 2019, BuyProperly has launched 13 properties on its online platform, including a home in Austin, Texas. Using a proprietary AI system that uses over five million data points to identify deals of interest, users can opt to invest in a selection of real estate offerings from single-family homes to pre-construction developments and commercial properties.
Parts of this interview have been removed or edited for clarity and brevity.
How would you explain what BuyProperly is?
It’s kind of like buying stocks, except you are buying stocks of real estate. You browse your properties, you click on what you like, you put in the amount that you want to invest and you basically check out. It’s a very Amazon-like experience of buying houses.
What led you to start the company?
It started out of my own frustration. I used to work at Amazon, and I’m a big saver, so I am always, always saving. I can even save when I’m on a student stipend. But when it came to real estate, it was kind of out of my reach. That got me thinking, “Okay, if I’m at Amazon and that pays reasonably well and I save and I still struggle, what is happening to the rest of Canadians?”
That got me researching “What are the options for buying real estate if you do not have all of the money?” and there wasn’t much of an option. You could put it in a real estate mutual fund, but then again, that was not seen as doing a private deal.
In May 2021, BuyProperly raised $2 million in funding to expand. What has happened since then?
We have made our AI richer. We’ve launched in the US, so we’ve expanded into another country. Now, Canadians can actually invest in properties in the US on a personal basis. We’ve started being able to provide people with a little bit of segmentation based on their portfolio. Those are some of the things we’ve done. Our secondary marketplace launched online as well, which means if people wanted to sell the shares of their property, they could list it on the platform and sell it to other buyers.
Real estate is getting more expensive. Has demand increased for BuyProperly because of this? How is this a more accessible point of entry into real estate investing?
It is getting harder for everyone. It’s not just that you have to be a younger person or a middle- to lower- income person. It’s difficult even if you’re earning $150,000 a year because you need $200,000 just for the downpayment for a lot of houses in the GTA. That’s a huge amount. It’s almost out of reach for the majority of Canadians. About 70 per cent of Canadians earn less than $100,000. With real estate prices rising, this obviously becomes more relevant.
Even if you take that out of the equation — the prices going up — the other thing that investors are getting from the platform is the convenience. Even if you have the money, it’s cumbersome to find an agent, lawyers, coordinating, going around searching, analyzing, never knowing if you paid the right price or not. That’s a lot of effort that goes into investing in real estate, which is also something that we take away and do it for the customers.
Why is $2,500 the minimum investment?
At the time when we started out, we thought that $2,500 seemed like an amount that would not be too high for most people, but also not be such a small amount where you wouldn’t care what the returns are. If you put in $10, it doesn’t matter if it doubles because it’s only $20. It has no consequential impact on you. And so the intent was that it should be a real mechanism of actually building wealth, but also not so high a number that people cannot get to it.
How do you actually make money?
All of our rental properties have a monthly rental income. That’s the first revenue stream that you would have as an investor. The second would be capital appreciation, which you will only see at the end of the hold period, which for us is typically five years. At the end of the five years when you sell, you will get the gains from the capital appreciation.
The third one would be principal paydown. Because we are using leverage, it kind of increases the value of equity over time and the principal paydown is another piece that adds to your return. And the fourth one is [reinvestment]. What we do at our end is reinvest a small amount of cash that a property generates back into the house to make it more energy efficient so that it is a greener, smarter house.
What makes you different from other companies?
There’s a couple of things that we offer that I don’t believe anybody else does. One, is we are the only platform that uses AI to actively identify properties, because what it does for us is simply lower the cost. We don’t hire an army of brokers or a team of investment bankers that run the analysis. We’ve instead coded it into the AI model which makes affording the cost of these properties much cheaper and the outcome much more efficient. No matter how awesome your agent or broker is, there’s only so much they can access in terms of data. As humans, there’s only so much they can do. There’s no way that they run the whole GTA every Thursday in three hours, right? That’s the big advantage that we have.
We are also the only and the first company to offer a secondary marketplace. When you buy these shares, you can actually sell them in the secondary marketplace any time you want. That is another thing that differentiates us. It solves the liquidating problem of real estate, which means it’s not like if you bought it you’re stuck forever.
We are the only fractional real estate company that offers a cross border option, which I believe is a huge deal to be able to just expand into another geography without having to worry about taxes in that country or how things work in that country because we will manage that. Right now, we’ve only expanded to the US, but we hope to be able to add more countries over time.
