Ryan Williams wants to use technology to give more investors access to commercial real estate–and grow their wealth over time.
Ryan Williams, co-founder of Cadre, an online platform for investing in commercial real estate.
Ryan Williams is noteworthy–even without factoring in his famous co-founders Jared and Joshua Kushner, the former of whom is not only Donald Trump‘s son-in-law, but is also a key adviser in the Trump administration.
Although the Kushners helped found the real-estate investing startup with Williams in 2014, their roles today are strictly as advisers, says Williams, who met Joshua when they both were undergraduate students at Harvard University. However, it was reported today in The Wall Street Journal that the elder Kushner still maintains his investment in the company, which allegedly wasn’t disclosed upon joining the administration. (The Cadre investment is said to be held by an entity called BFPS Ventures, listed as owning unspecified New York properties valued at more than $50 million, according to the initial disclosure filing.) Williams was unable to be reached for comment on the allegations.
Even so, the 29-year-old Williams is a force, as is his company. Since launching, Cadre has generated nearly $1 billion worth of deals, raising close to $70 million in funding from high-profile investors such as Peter Thiel, Goldman Sachs, and Jack Ma.
The idea for Cadre didn’t come immediately to Williams. He started his first business during puberty–a sports apparel manufacturer called Rapappy–which he sold before graduating from high school. Later on, when attending Harvard, Williams launched a second startup, connecting undergraduate students to business school professors.
It wasn’t until the housing market crashed that he got his biggest idea: As small, commercial properties were being auctioned off for pennies and cents, “there was clearly a disconnect between what the homes were worth and what they were being auctioned for,” he recalls. He wanted to buy into the opportunity.
So Williams set up a website where he could analyze these homes using a tax parcel ID–which tracks the value of a property over time–and measured this against what they were selling for. Using the data, and bolstered by the cash of wealthy Harvard alums including the Kushners, he started buying dozens of properties and flipping them for three times their original price. “By the time I graduated, I was at a crossroads: Do I scale this business nationally, or do I do tech banking at Goldman Sachs?” he recalls thinking.
Williams decided to do both. He pulled 18-hour days as an investment banker–and then would quietly work on his startup from the comfort of a supply-closet-size room by night. Real estate, he figured, was a valuable asset that ought to be made available to more (and more average) investors.
Cadre is an e-commerce site for investing in real estate. It connects customers–primarily wealthy individuals, referred to as “qualified purchasers”–to property deals across the U.S. (Cadre requires a minimum investment of a few hundred thousand dollars; that’s somewhat less than what a traditional fund requires, but likely more than what you’d pay to buy into a real estate investment trust, or REIT, which trades like common stock.) Williams declined to comment on what exactly the company charges its investors–it asks for an upfront fee and a recurring subscription rate–though notes that it’s in the range of a “couple hundred basis points.” A fund, by contrast, will typically take 2 percent of the investment, and then 20 percent of profits over time.
Think of it this way: “We’re giving people direct, deal-by-deal access to commercial real estate, like you would buy and sell something on Amazon,” says Williams. The technology, he says, allows the company to be more nimble than some competitors. Deals on Cadre can be completed in weeks, rather than the standard months. The company also claims that its deals are more transparent than a typical fund’s, where the managers, not the investors, are the ones making decisions about the assets.
Analysts agree that transparency is something that is largely lacking in the industry. “Traditionally, the market has been dominated by brokers, and there are very few people who are aware of the price of a deal being struck,” notes Surabhi Kejriwal, the real estate research leader for the Deloitte Center for Financial Services, a consulting firm. “Now, the difference is that a lot of these technology startup companies are trying to disrupt the space.”
Although Cadre faces competition mainly from the traditional brokers, a growing number of startups have emerged in the real estate leasing space, such as 42Floors, a San Francisco website that lists commercial real estate and office rentals, and Rofo, an online marketplace for property listings and potential tenants that can facilitate lease deals without broker intervention. (The former, incidentally, has received investment from Joshua Kushner’s Thrive Capital.) In a recent report, “Commercial Real Estate Redefined,” Deloitte suggests that over the next several years, brokerage companies will be forced to “transform into technology firms.”
In this climate, it’s perhaps not surprising that Cadre has grown rapidly. Williams says that a Series C fundraising round is soon to come. The company has also reportedly generated a $250 million “backstop,” a pool of capital from the family office of George Soros, a prominent investor and philanthropist. In an interview, Williams declined to comment on the source of this backstop, though he did say Cadre will use the funds if there’s a property it wants to buy before it has investors lined up.
Still, the size of the opportunity itself is unclear. “The real estate industry itself is niche,” says Deloitte’s Kejriwal, who notes that Cadre may struggle to compete with traditional brokers over time. “At one level, you could say they’re being more transparent, but the traditional players also have their own space. We’re not sure if people are receptive to doing real estate deals online.”
Samir Kaul, a founding partner with venture capital firm Khosla Ventures and an investor in Cadre, also points out that getting to scale could be a challenge for the one-year-old company–and its wunderkind co-founder.
“They are bringing technology to real estate,” Kaul says, “so they’ll face the same kinds of challenges that tech does.” While many tech startups boast a trove of venture capital funding, comparatively few are profitable; it’s therefore unclear how a startup like Cadre might fare during an economic downturn, or as the Federal Reserve continues to hike interest rates. Kaul characterizes these as challenges that are “beyond” the company’s control.
Williams, for his part, is well aware of the challenges ahead–and harks back to the early days, when he couldn’t afford to offer salaries and paid his employees out of pocket. “I love proving people wrong,” he says. “There have been some instances where things have seemed uncertain, but I like absorbing uncertainty. That’s my role here as CEO.”
Correction: An earlier version of the story misstated the amount of Cadre’s backstop. He has a reserve of $250 million.
Under Construction Flat Booking Finds Tax Deduction Under Time Constraints
If a buyer makes a transaction to book an under-construction flat and if he acquires it within the three-year period of the sale of his old house, then he is entitled to a tax deduction, says a ruling from the Mumbai bench of the Income-tax Appellate Tribunal (ITAT). If an apartment is booked in an under construction project than it must be viewed as a method of constructing residential tenements, says the December 18 judgment.
That means if the buyer uses the entire gain from the transaction to buy another house within two years or construct another house within three years. The two- and three-year period applies even if the buyer bought another house a year before selling the first one. But the property should have been bought in the name of the seller.
It is mandatory that within a period of two years after or one year before the date of transfer of old house, the taxpayer should construct a residential house or acquire another residential house within a period of three years from the date of transfer of the old house. The date of receipt of compensation will determine the period of acquisition or construction in a case of compulsory acquisition.
This exemption is effective and can only be claimed in respect of one residential house property purchased/constructed in India. In the case of multiple house purchases or constructions, the exemption under section 54 will be available in respect of one house only. Any purchases made outside the country does not fall under any kind of exemption. Section 54 gives relaxation in such cases by providing relief to the taxpayer who sells his residential house and acquires another residential house from the gained capital.
After the sale of an asset, the difference between the buying price and the selling price is a capital gain or a capital loss. These are further classified as long-term or short-term. If a property is held for 24 months or less, with effective from 2017-18, then that asset is treated as Short Term Capital Asset. Then an investor can make
treated as Long Term Capital Asset. Then only a Long Term Capital Gain (LTCG) or Long Term Capital Loss (LTCL) can be made on that investment.
ITAT agreed that booking of a new flat in an under-construction apartment should be considered as a case of “construction” and not “purchase”, hence following the earlier decisions of the Bombay high court and the tribunal itself. Further ITAT allowed the fact that the construction can began prior to the date of sale of the old asset. Same was stated in the earlier judicial decisions of the Karnataka high court and Ahmedabad ITAT, that the date of commencement is not relevant but it is the completion of construction that comes in relevance to section 54.
HDFC and Quikr Make A Deal
According to a deal between HDFC and Quikr, a stake of more than 3 percent will be given to the mortgage giant in return to its transfer of offline and online real estate brokerage business to the classified ads platform.
After acquiring Commonfloor in 2016 Quikr already has a major presence in online real estate broking.
“Most of the searches for real estate are moving online. Quikr has a much bigger presence online. Through this deal, we are partnering Quikr in the broking business,” said HDFC MD Renu Sud Karnad. According to her, this deal will strengthen Quirks position with offline support.
The deal suggests that HDFC will transfer to Quikr its entire shareholding in HDFC Realty, a real estate brokerage platform, and HDFC Developers, which runs the HDFC RED online platform.
Karnad added that the deal expects Quikr to generate home loan leads for HDFC. The transaction consists of a co-branded alliance between both parties and the HDFC brand will continue to be used online for a year.
The e-real estate classifieds platform HDFC RED has around 7,000 project listings and generates traffic of over 80,000 unique visitors per month. HDFC Realty has a 300-member, in-house sales team, and 7,000-strong nationwide broker network. Avendus Capital was the exclusive financial adviser to Quikr while Kotak Investment Banking acted as the exclusive financial adviser to HDFC on this.
30 million monthly users make Quikr India’s largest classifieds platform. It runs multiple vertical businesses across real estate, automobiles, jobs, services, and goods. The Quikr Home, its real estate vertical generates 3.5 million monthly unique visitors.
Both companies intend to work closely and conduct analytics and identify potential homebuyers, and therefore home loan customers, early in their home-buying journey. Quikr founder and CEO Pranay Chulet said, “We see great synergies between Quikr and HDFC as we start working together to bring a seamless online-to-offline platform to developers and consumers.”
Retaining The Sustainability: GRIHA Launches Star Rating For Urban Homes
Green Rating for Integrated Habitat Assessment (GRIHA), is the National Rating System of India, a Sanskrit word meaning – ‘Abode’. Human architecture has always consumed resources in the form of energy, water and material from the environment. From their construction to operation, these habitats absorb the resources throughout their life cycles, emitting wastes in the end. This emission could be direct in the form of municipal wastes or indirect emission into the atmosphere, such as from electricity generation. Hence GRIHA was formed to reduce an architecture’s resource consumption, waste production and overall environment impact up to certain national acceptable limits.
In attempt to quantify all these aspects, like energy consumption, waste generation etc. GRIHA tries to manage, control and bring down the respective to the best possible limit. Being a rating tool, it helps people to assess the performance of their respective projects against the national benchmarks.
Hence it becomes an evaluation of the environmental performance of an architecture on a holistic level. Covering its entire life cycle, this evaluation provides a specific standard for a ‘green building’. This rating system aims to strike a balance between established institutions and emerging concepts, on a national as well as the international level.
The process starts with an online submission of documents according to the criteria. Then a team of professionals and experts from GRIHA Secretariat takes a site visit for the evaluation of the building. There are four different sections categorized by 34 criteria in GRIHA rating system. Some of them are site selection and site planning, conservation and efficient utilization of resources, building operation and maintenance, and innovation.
Sanjay Seth, CEO, Green Rating for Integrated Habitat Assessment (GRIHA) Council says, “A rating between one and five stars is being provided, helping the costumers to know about the sustainability of the houses”.
According to the Union Minister, Hardeep Singh Puri, the climate resilient and sustainable buildings are the need of the hour. As the government is aiming to construct around 1.2 crore houses for the urban poor under the affordable housing scheme.
In one of his keynote addresses, Andreas Baum, Ambassador of Switzerland to India and Bhutan said that the Indo Swiss collaboration is operating with the Indian Bureau of Energy Efficiency in the development of guidelines for energy efficient housing.
“At present India is witnessing a rapid urbanisation, if each building becomes greener than the last one, then we have a huge opportunity and hope for our country. We need to look beyond the conventional methods of building, in order to provide our citizens with a good quality of life. Hence, GRIHA gains important in meeting our national goals with respect to a sustainable society”, says Dr Ajay Mathur, director general, TERI & president, GRIHA Council.
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