When Phillip Michael and his soccer star nephew Martin Braithwaite first started investing in real estate in 2016, the plan was simply to invest.
But the plan changed, as Michael, a Black man born and raised in famously egalitarian Denmark, saw the effects of the racial wealth gap in America, prompting the two to build a real estate crowdfunding company with a social mission.
NYCE Companies, the private holding company for commercial real estate that the two launched this January, offers shares of real estate developments to small-time investors, with the mission of helping create 100,000 millionaires of color by 2030.
Now, the company has entered into an almost half a billion-dollar deal, fresh off becoming the fastest real-estate company to sell $1 million in stock via the SEC's crowdfunding offering, which allows non-accredited investors to invest directly into private companies.
The company is partnering with Texas-based developer LYND on $477.6 million of apartment deals, starting with the purchase of a $56.8 million 280-unit garden apartment complex in Fort Lauderdale, Florida. NYCE will offer shares of the properties on its platform, and LYND plans to partner with NYCE on all of its forthcoming deals.
"So many people are locked out of the American dream," said LYND CEO A. David Lynd in a press release announcing the deal. "Our partnership with NYCE is designed to open up access to those who have been excluded from real estate investing in the past."
Real estate crowdfunding and the racial wealth gap
NYCE lists shares of the properties it owns, such as a tech-heavy student housing complex near Temple University, on crowdfunding sites like Republic and Wefunder and is developing an app with real estate crowdfunding company LEX.
"What they're buying isn't necessarily a piece of real estate, they were buying a sense of empowerment," Michael told Business Insider.
For NYCE past projects, investors have been able to invest a minimum of $79 on Republic and $500 on Wefunder. Some of that equity was invested into the deals with LYND, and Michaels said that once the app rolls out in November, they will be able to offer more shares into individual properties.
Michael said the firm's plan is to eventually be able to offer shares for as little as $10.
While real estate crowdfunding has become an increasingly popular way for retail investors to get their hands on real estate, NYCE Companies' social mission of working to close the racial and gender wealth gaps is unique in the space. With its $1 million fundraise using Regulation CF, the SEC's crowdfunding offering, the company sold shares to over 2,000 people in September.
Michael told Business Insider that his mission is to provide opportunities to lower economic inequality by providing the advantages of owning real estate to people who don't have the money or expertise to actually invest in property themselves.
One major driver of economic inequality in the country is race, as housing segregation and systemic racism have prevented many Black Americans from owning real estate, the largest source of wealth for most Americans.
With this summer's historic uprisings and protests in the wake of the police killing of George Floyd, Michael hopes to make a contribution by helping to build a "culture of buying real estate," he told Business Insider. He referenced Weeksville, a neighborhood in what is now Crown Heights, Brooklyn, where in the 1800s, free Black men owned a large share of the actual homes, as an example of the possibilities of real estate ownership.
How Michael become a real-estate influencer
One way that Michael is working to inject that culture of owning real estate is through nightly vlogs and interviews on his Instagram page, which has over 50,000 followers. He started vlogging early in the pandemic, and quickly saw his viewership climb after he released a video called "4 Ways COVID-19 Can Make You Rich."
Michael's nephew Braithwaite is a forward for FC Barcelona, and boasts an impressive 796,000 Instagram followers. While his high profile may have helped attract people to Michael's Instagram, Braithwaite hasn't posted about NYCE Companies or linked to Michael's Instagram page.
His nightly broadcasts include interviews with other entrepreneurs, like personal finance expert and "Budgetnista" Tiffany Aliche, and walk viewers through the basics of managing their money and the real estate industry, by explaining them in plain English. In one recent video, he explains the importance of ownership by walking through 50 Cent's lawsuit against Rick Ross for using a sample of 50's hit "In Da Club." He explained that 50 Cent may have written the song, but his lawsuit failed because he didn't actually own the rights to his songs, Dr. Dre and Eminem did.
When Michael first moved to the United States in 2014, one of his first jobs was a journalist at Bisnow covering real estate. He credits that job with helping him learn how to communicate finance to people who aren't familiar with the concepts.
He said that some of his followers have gone on to invest in NYCE's crowdfunding opportunities, but that he doesn't view it as marketing for the business. Instead, he's shooting to make "money management become part of the everyday discourse," and is just as happy using it to explain the stock market to a follower who hits his DMs as is he is to network with future potential business partners.
The deal with LYND is Michael's biggest deal yet, and sets him well on his way to meeting his goal of working on $1 billion worth of deals by 2024. It combines almost $195 million in ground-up construction with over $280 million in acquisitions and is entirely focused on the multifamily, apartment class, which has historically performed much better in economic downturns than other forms of commercial real estate.