Nyce is part of a $57 million fundraising effort by a Danish real estate investor and author. The aim is to buy and build urban real estate and create wealth in America’s minority community. And now you can invest in Nyce through the WeFunder platform.
The man behind the company is Philip Michael. His book, Real Estate Wealth Hacking, describes how he turned $500 into $1 million.
This started by putting the minimum 3.5% down payment on FHA mortgages. He argues that the racial wealth gap can be narrowed by young people using debt to leverage a minimum of equity into managed property.
Nyce would use its money to build out properties Michael has already identified. Michael’s partner is his nephew Martin Braithwaite, also Danish-born, currently playing for FC Barcelona.
Philip Michael is a 36-year old Danish-born entrepreneur in New York. He was briefly a boxing announcer. But he quickly took his writing talents to Bisnow, which now focuses on commercial real estate and is owned by the private equity firm Wicks Group.
An article he wrote at Entrepreneur in 2018 describes what he calls his wealth secret. It uses the 1031 Exchange, a method of swapping property tax free, to defer capital gains. It also uses Section 721 of the tax law to turn 1031 cash into a fund.
Crowdfunding grows it into something that can make significant deals. The idea is to hold as many assets as possible with a minimum of cash and re-invest the capital gains.
While Braithwaite’s football career has drawn some media attention to Nyce, the company is basically a crowdfunded piece of Michael’s real estate action.
The risks of Nyce are obvious when you look around. The novel coronavirus pandemic has had a dramatic impact on urban real estate, especially where the company is investing. That could spell opportunity if the company can buy now at low prices.
But Nyce is investing in rental properties, in markets that currently suffer from very high unemployment. Real profits could be some years away.
According to Nyce’s WeFunder page, which shows Michael and Braithwaite in street wear, the company wants to raise $25 million backed by rental property in Jersey City and Philadelphia. As of June 26, 34% of the $1.07 million of start-up capital had been raised. Initial funds would go into digital ads, the rest into operating the business.
Michael says he has already turned $850,000 of cash into $10.2 million in assets, through subsidiaries. The WeFunder page claims Nyce has $57 million in projects under development, one of them 60% complete.
The third partner in Nyce is attorney Dmitriy Ishimbayev, who works out of the new World Trade Center building and is also listed as a corporate broker. He did some work writing about the redevelopment of the London Olympics site while at New York Law School, and has a business degree from Brooklyn College.
The Bottom Line
What makes Nyce different from 1,000 other young real estate go-getters is the pitch. It is explicitly targeting young black men, promising to create a proprietary “Robinhood-like app,” hoping to create 100,000 millionaires of color by 2030. Most of the WeFunder page consists of testimonials from investors, talking about the mission and dreams of wealth.
You can find hundreds of small companies investing in real estate, even urban real estate.
But you won’t find many with Michael’s brash pitch, or high ideals.
That doesn’t mean you’re investing in ideals. To invest in Nyce means buying into real estate and Michael’s wealth system. Read his book and kick the tires on his deals before making your decision.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear, available at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story.
Investing through equity and real estate crowdfunding or asset tokenization requires a high degree of risk tolerance. Despite what individual companies may promise, there’s always the chance of losing a portion, or the entirety, of your investment. These risks include:
1) Greater chance of failure
2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education
Read more: Private Investing Risks