Off the plan property transactions site Investorist launched in the US hot spot of Miami in May. Founder Jon Ellis relates his experience.
So far the platform, which connects developers with network partners, has enjoyed a great deal of support including from Florida’s largest agency network which initially listed 10 of its major new projects on the site.
“Our first US office launched with over 60 projects from many significant developers and also some of New York’s largest new apartment projects such as the $20 billion Hudson Yards, one of the largest projects in the US which features 16 skyscrapers built over 28 acres,” Ellis enthuses.
Making the big move
Ellis says the business decided to make the move to the US because “our clients told us we needed to, especially our Chinese clients”.
With 10 offices around the world, including Shanghai, Beijing and Shenzhen, the Investorist business works with hundreds of Chinese real estate and migration agents, financial planners, and others who source property for clients looking for international investments.
Miami, Florida was chosen as a base because of its high level of property activity.
“There is a massive amount of condo development happening there at the moment, and importantly Miami is the US gateway to Central and South America, key inbound buyer markets,” Ellis confirms.
“We knew we had strong demand from Chinese buyers already. However we are not resting on that, we are intensively building our networks throughout the US, Central and South America.”
Changing the pitch
But the launch was not without its hitches.
Ellis, who founded the Investorist in Australia in 2013, says within the first two weeks it became apparent to his business development team that key benefits of the offer weren’t resonating with local agents the way they did for the company’s Australian network partners.
“We had to change our pitch,” Ellis says.
“The Investorist benefit which appealed the most was the huge time saving factor the platform delivers.
“The process of gathering information and listing a project, with all available stock, prices, floor plans, brochures, contracts etc would typically take a US agent a week or more to finalise, whereas the same process on Investorist takes just a few hours, a massive productivity gain.”
The fact that Investorist does not charge commissions to either sellers or buyers has also become a big selling point.
“The platform’s transparency in the way it operates and the fact that each user controls and owns all their sales lead data is a big plus,” Ellis adds.
Ellis observes the system functions a little differently in the USA.
“Developers often build apartment projects to ‘build and hold’, leasing out the apartments after completion rather than selling all as most Australian developers do,” he points out.
“And of course the Australian strata title model of apartment is referred to as a condominium in the US.”
In terms of differences between the agents in the two countries, Ellis says there are many.
“Some that stand out for me are; every property sold has both a 'listing agent' and a 'selling agent’ (known as a buyer’s agent in Australia) and the vendor pays commission to both of them.
“US agents or ‘realtors’ mostly work conjunctively sharing commissions 50/50, it is a much more co-operative model than in Australia.”
Ellis says the team also wasn’t anticipating the lack of competitors.
“We expected there would be lots of similar companies to ours operating in each market, “ he says.
“But our own research shows what our clients keep telling us – no-one is offering what the Investorist platform does, so that has been a great discovery which enhances our competitive advantage.”
And it is worth it.
With 323 million people, and the property market worth more than US $27 trillion of which a significant proportion is off the plan or pre-construction sales, the potential is phenomenal.
“In 12 months’ time, I expect the US market to be bigger than Australia for us in terms of revenue,” Ellis says.
Signing up the big names
Since launch the company has signed Cervera Real Estate, Florida’s largest agency group, and Related, one of the top three condo developers in America.
“Cervera is the only firm to exclusively represent and sell out over 100 of South Florida’s most iconic condominium projects,” Ellis says.
Other big names to support the platform include One Sotheby's International in Florida, Douglas Elliman, Citi Habitat and Corcoran Sunshine, the top brokers in New York.
Ellis says focusing on where the best opportunities lie is key for the first foray into a market like the US.
“Go over there and talk to as many people in your industry as you can, research and network like mad,” he advises.
“Two of our board members, plus myself and my wife Kathryn and others in our business development team spent close to a month doing this, with 6 to 8 meetings each booked in every day.
“This gave us market insights and contacts which have been invaluable.
He adds having the capital in place to fully fund expansion is also critical.
“Employ the best lawyers, accountants and advisors you can,” he says.
“The US is a difficult and expensive market if you get it wrong. Network as much as you can, and really utilize all those contacts once you make them.”