Jamison Manwaring sought a way to merge his passion for real estate with an entrepreneur project driven by a community feel.
When the real estate crowdfunding laws in Arizona changed and opened up the investment market in 2015, he got that opportunity. Manwaring ran with it when he and business partner John Kobierowski launched Neighborhood Ventures in 2017.
Their Phoenix-based business brings the crowdfunding method of finance to the real estate realm, making it the first in Arizona to do so.
Since then, their venture has funded four properties, all small apartment complexes, throughout the Valley. They’re fueled by more than 400 investors, each contributing the minimum investment of $1,000, or more. The average investment is $5,000. All investors are Arizona residents.
Normally, Manwaring explained, his and Kobierowski’s company would be built through, as he described, “the country club method,” on backs of 10 or 20 wealthy investors.
“We decided to do it the hard way up front — a company that is an inclusive business (where) everybody can invest with us,” Manwaring said.
The projects are typically older apartment buildings that are in need of some renovation and a touch of contemporary TLC. They work with residents to make the transition easy as the structure is being renovated, with some even living in the complex while the project is being done.
The properties are in great neighborhoods that are walkable with grocery stores, parks or other amenities nearby, Kobierowski said. While it’s a benefit for the neighborhood and residents, it also provides perks to non-traditional investors who are able to see where their cash is going to with less risk than traditional methods.
“This is allowing people to invest in things in that are stable. These are buildings that are in your backyard. People can drive by them and walk by them,” Kobierowski said.
Investors receive a preferred return of 12% on their investment, meaning they are the first to get paid. Only after that do Manwaring and Kobierowski get their checks.
According to industry publication Financial Samurai, in 2019, crowdfunding investors received an average preferred return of 8%.
Attracting a new kind of investor
The fact that many of Neighborhood Ventures’ investors are either new to the game or don’t have a tremendous amount of disposable income and are looking to make the most of the nest egg they do have is never lost on them either.
“We’re catering to a $5,000-investor who may be a school teacher in his 50s and that money is very important to them,” Manwaring said.
The first project Venture on Wilson is located in downtown Tempe, steps away from the shops and restaurants on Mill Avenue, Arizona State University, the light rail line and a new Whole Foods Market.
It is the only completed project of the four with residents moved in to its one- and two-bedroom apartments with average monthly rents of $1,150-$1,250.
This is also one of the Neighborhood Ventures properties in which Dan Welsh has invested. Welsh, an experienced Scottsdale investor, has an interest in all four of Neighborhood Ventures’ properties having invested $10,000 in each.
Welsh hadn’t been aware of the change in real estate crowdfunding laws when it happened. But after reading a 2017 article in The Arizona Republic about the company, he was intrigued. The 12% preferred return added to his interest.
“I invest in the stock market but I found this as a way to get a good return but with much less risk than I was facing on day-to-day trades on the market. And that has proven to be true,” Welsh said.
He likes that each property is in a different part of town with different styles and layouts. He said the company’s comprehensive website makes it easy for investors to keep track of what’s going on with information and videos that constantly are updated. Welsh has received a couple of checks on the Tempe project and expects payments on the second project, a complex in central Phoenix that just came on the market, soon.
Manwaring and Kobierowski were big factors in Welsh’s decision to invest and plan to invest in future projects. He likes the inclusiveness behind the concept as well.
“Initially (I invested) for the return. But now, it’s about the people and the idea,” Welsh said. “It’s a very well run operation and I’m proud to be part of it.”
How the partnership formed
A former equity analyst at Goldman Sachs in New York City and VP of Investor Relations at LifeLock in Tempe, Manwaring yearned to shift away from the corporate and finance world and move into something more real estate and entrepreneurial.
He had owned a 10-unit apartment building in New York that needed work and he loved the rehab process. That’s where he would set his sights. He kept an eye on crowdfunding legislation with the idea of launching a company that would raise capital in a new and modern method not reserved for the wealthy.
That’s when his and Kobierowski’s paths crossed. A commercial real estate veteran who is the principal of ABI Multifamily, an apartment brokerage company in Phoenix, Kobierowski has been involved in upwards of 1,400 apartment transaction sales, condominium construction and ground-up projects.
His experience coupled with Manwaring’s financial and fund-raising chops were the perfect pairing in this new niche of real estate. The timing also was right.
“I wanted to do more with mom-and-pops that weren’t so active, basically because they weren’t allowed to be,” Kobierowski said. “When the laws changed, I loved that opportunity.”
This partnership has put Neighborhood Ventures in a crowdfunding industry that’s expected to be worth $93 billion by 2025, according to The World Bank.
In 2017, the North American crowdfunding market generated $17.2 billion.
Neighborhood Ventures’ more than 400 investors represent a diverse demographic with professional backgrounds, bank accounts and motivations to match.
Although the target demographic is the 40-60 age range, the youngest is 18, with a number in their 20s, who rent but know the value of investing and see real estate as a more secure avenue. Many are Millennials who are saving up to buy their first homes and plan to use this as a way to get there. Others want to pad their savings accounts or retirement funds.
Regardless of the reason, investors like the hands-on opportunity this offers that other investment ventures don’t. Some have referred vendors to do countertops, carpentry or other work on the projects.
“They can see their investment, drive by it, go to open houses and see the progress,” Manwaring said. “They are a lot more engaged along the way and they love the ability to be involved.”
Interesting stat: The global crowdfunding industry is projected to be worth $93 billion by 2025, according to The World Bank.