Hi, I’m Bette Hochberger, CPA, CGMA. For today’s Miami Monday, I will talk about Miami tech start-up nxtCRE and their take on finding commercial real estate fast and straightforward. Let’s jump in!
What They’re Doing
Imagine you’re a commercial real estate investor who recently sold a property and is now facing a hefty tax bill. But before you rush to pay up, there’s a tax strategy you should know about- the 1031 exchange. This tax-deferred transaction allows real estate investors to sell one property and use the proceeds to purchase another, all while deferring capital gains taxes until the new property is sold.
The catch is that you have a limited time to take advantage of this opportunity. Specifically, you must find a new property within 45 days of the initial sale and complete the transaction within 180 days. Furthermore, the properties being exchanged must be considered “like-kind” according to IRS guidelines.
That’s where nxtCRE comes in. They call these real estate experts “must-buy investors,” or MBIs for short. According to the company, around 70,000 MBIs each year collectively invest $400 billion in commercial real estate using $150 billion in equity and $25 billion in debt.
nxtCRE helps these MBIs find appropriate commercial real estate investment opportunities by partnering with lenders. If a customer expresses interest, nxtCRE and the lender work together to present relevant opportunities. Both parties then share the 75 basis point fee that is earned from successful transactions facilitated by the platform.
How They’re Doing It
The concept involves sending borrowers a questionnaire when they are nearing the end of their loan term. If the borrower intends to sell the property, the loan provider and nxtCRE offer to assist them in identifying their next investment opportunity.
Next, nxtCRE compiles a selection of properties they believe may suit the borrower. However, the startup acts solely as a connector between the buyer and seller and does not represent either party. All information pertaining to the buyer is kept anonymous, and sellers can only view details such as the buyer’s equity amount and their 1031 deadline.
Adam Sharif, CEO and Founder of nxtCRE, says that their goal is to sign up every lender in the nation. They also secured a partnership with Lument, a commercial banking company with $50 billion in loans across 7,000 borrowers and $85 billion in assets under management.
Sharif, who has been primarily located in South Florida since 2010, began developing the concept of nxtCRE three years ago. It took his team two years to build the platform, and they began approaching lenders as customers in late 2021.
With a team of nine individuals who have a combined 150 years of experience in commercial real estate and capital markets, Sharif spent 2022 finalizing the platform and securing partnerships with lenders.
Overall, I think this concept is exciting, as it will make finding commercial real estate fast and straightforward. I hope you thought so as well.
As always, stay safe, and I will see you next time.