Toronto start-up aims to make real estate investment accessible

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The latest start-up to enter the fractional real estate market in Canada is already gaining fans, even though it’s still a few months shy of officially opening for business. 

Toronto-based Fractionum was among the top three finalists at the pitch competition at the Collision technology conference in Toronto in June, making an impression on the panel of judges and audience alike. 

In the days that followed founder and CEO Ron Glozman’s three-minute mainstage presentation, the company’s website experienced a surge in traffic — repeatedly crashing and temporarily preventing visitors from getting on the waitlist to invest, according to the CEO.

 

In a nutshell

 

Fractionum’s pitch? Unaccredited Canadians can invest in real estate with as little as $100 (with no upfront fees), and unlike a REIT, they can choose the property they want to invest in. “You literally become a partner in the business and get direct ownership to all of the income that’s associated with that,” says Glozman.

Meantime, the company expects to be licenced as an Exempt Market Dealer (EMD) — a type of securities licence — as early as September, which Glozman says will offer consumers a level of security that is absent from many other fractional real estate platforms.

“You’d think there’d be hundreds of companies with this licence, but there are less than 50 in Canada,” he maintains. “We spent a quarter million dollars and 18 months to set all this up,” Glozman adds, referring to all the legal, accounting and other fees and obligations required to obtain EMD status. “We’re doing this to build trust… we’ll have yearly audits to the same level as a public company.” 

 

Invest like the wealthy

 

Glozman, a serial entrepreneur, who previously raised $15 million for an AI start-up, which was scaled to 75 employees, says his goal is to make investing fun, easy and affordable for Canadians and to help the 99 per cent invest like the one per cent.

“Unless you’re a billionaire… you’re not going to hear about these deals, and if you do hear about them, you need expert staff with months of time to underwrite and assess the property… then you need millions in cash for the down payment.”

The system, he says, is set up to prevent the average person from breaking in, but Fractionum aims to change that with its low barrier to entry. 

The company works with top real estate operators (known as general partners) with a proven track record who review hundreds of deals every year and determine the most profitable ones in which to invest.

According to Glozman even the best operators in the world are 15 to 20 per cent short on every deal they make, which means, on average, operators need one to 20 million dollars within 60 to 90 days to be able to close on their deals. 

“And that’s where we come in. We connect operators with investors at the right time at the right place so investors can invest in deals they would otherwise not see and operators can close on deals they otherwise would not be able to.”

To be clear, says Glozman, it is the general partners who actually buy the property, operate it day to day and deal with tenants, while Fractionum ensures all of the regulatory compliance functions are adhered to. 

 

Finding its niche

 

While there are other companies in the fractional real estate market, Glozman says some have higher investment minimums and only work with credited investors (generally those with $1 million in assets or annual earnings of at least $200,000), disqualifying most Canadians.  

Working with real estate agents 

 

Fractionum focuses on the commercial multi-family property market, estimated to be a $5 trillion industry.

The company’s niche is properties with 10 or more units, ideally 100. Glozman says they are always looking for properties to acquire, and he welcomes any real estate sales reps with properties for sale to get in touch.

 

CEO learned the value of real estate

 

Glozman is not entirely new to real estate. He says he grew up managing a six-unit apartment building in Toronto, where he came to appreciate the benefits of real estate investing. He describes how his family of eight came to Canada from Ukraine in 1989 with just $300, and after starting at the bottom, his parents worked their way up and entered the middle class, thanks in part to real estate. 

 

Target demographic

 

The CEO believes Fractionum’s initial target demographic is the 18 to 50-year-old consumer who is comfortable investing online. “I don’t believe anyone is doing it quite like we do,” says Glozman. “We’re doing everything digital; it’s very simple and intuitive.” 

 

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