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CityShares

Investing in Brooklyn real estate without millions in cash

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NEW YORK (MYFOXNY) -

New York City real estate is so hot right now. Everyone seems to want a part of it but it's not affordable for all.

In the Bedford-Stuyvesant section of Brooklyn, the average listing price for a home is just below $1 million, according to Trulia. As trendy businesses have moved in, sale prices moved up more than 10 percent in the last five years.

Most people can't afford on their own to buy an investment property in New York, which is how real estate investor Seth Weissman came up with the idea for a fund he calls CityShares. He says he thinks the prices are poised to go even higher.

"We realized there was no current avenue for people who wanted to invest in that neighborhood, in real estate, to get exposure without buying a condo or co-op or townhouse in that neighborhood," he says.

The fund pools money to invest in Bed-Stuy properties.

But the fund is not for everyone. While you don't have to be a millionaire to join, you do need a pretty substantial chunk of change: the minimum investment is $100,000.

Eric Peerless, who runs a tech firm, is one of the early investors.

"It seems that everyone I know who bought a couple of years ago has done pretty well, so it's compelling to not have to put out that full amount of money you would to buy a condo or townhouse," he says.

Lauren Lyons Cole, a personal finance contributor for TheStreet.com, says while real estate is a great way to diversify a portfolio, CityShares could be too specific a fund for the average investor because she says it is a lot of risk to take on. She says you can get a good return in other ways.

Weissman says he thinks he can make investors an annual 12 percent return from a combination of rental income and property appreciation. He plans to replicate the model in other up-and-coming neighborhoods, such as Harlem and Crown Heights, in the coming months.

 

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