CityShares, a neighborhood-specific investment fund, accepts accredited investors from all over the U.S. and the world to buy into New York City neighborhoods for $100,000.
While Bedford-Stuyvesant is the first neighborhood CityShares is launching with, there will also be Neighborhood Investment Funds (NIF) for Harlem, Crown Heights, Bushwick and possibly Greenpoint and Sunset Park. CityShares Harlem will launch later this summer and Crown Heights will launch in the fall.
Founded by Seth Weissman in 2013, CityShares will give investors the benefits of investing in a residential building without having the resulting stresses of being a landlord.
"The fund investors are able to purchase assets in a diverse portfolio of properties within these communities without having to incur the associated expense, concentration risk and management headaches of being a full-scale property manager and landlord,” Weissman said. “To my knowledge, no other fund or investment vehicle for investing in NYC residential real estate offers these advantages.”
CityShares will manage all of the buildings, and investors will know exactly what buildings they have invested in. Investors will also have access to an online portal, where they will be able to see rent rolls, payment histories and other relevant information for their properties.
A total of $5 million will be invested in Bed-Stuy, which Weissman believes will buy $12 to $15 million worth of property, or seven or eight buildings. The platform will focus on buying up mixed-use and/or multi-family rental buildings.
Since the launch, Weissman said there has been a tremendous amount of interest expressed in the project. The fundraising for CityShares Bed-Stuy will be finalized in the fall.
CityShares is targeting annual returns in the 12 percent-plus range and a long-term gross annual return of 10 to 12 percent.
Weissman said there were a number of factors that played into his decision to launch the platform in Bedford-Stuyvesant. Access to transportation, the short commute to lower Manhattan and the “vibrant community” all contributed to the selection.
“You walk down the street and people plant flowers and trees. They take care of their neighborhood and say hello to you,” Weissman said. “That was something that was very attractive to me in terms of creating a place that’s enjoyable to live in and where you want to live.”
CityShares investors will hold onto the properties for seven to ten years, or more, in order to maximize each neighborhood’s appreciation value.
With the issue of gentrification a hot topic, particularly in Brooklyn, Weissman was quick to say that his company was not “here to make a quick buck.”
“We are looking at the long-term health and vibrance of the community,” he said. “We want to be a part of the neighborhood.”
That being said, Weissman said that services in the buildings, such as electricity and plumbing, would be updated, which would lead to “natural rent increases.”
“It’s sort of a fine line,” he said. “You want to attract capital to invest in these buildings and also respect the neighborhood.”
Regarding gentrification specifically, Weissman said that it is “a hot topic and it’s something that we have a very open dialogue about.”
“We look at this as an opportunity to positively impact a neighborhood and really create a dialogue between the buildings we own and manage and the people living in the neighborhoods,” he said.
Weissman is also a managing partner at Weissman Equities, which is based in Manattan, with his brother. He already owns properties in many of these neighborhoods and says his already-existing community presence gives him an advantage in understanding how to develop those properties appropriately.
“We’re active in those communities doing a lot of community improvement work, meeting with BID leaders,” he said. “They know us. They know the quality of the work that we do.”