The DeRosa Group is a family-owned business that invests in residential and commercial properties, with a mission of "Transforming Lives Through Real Estate." It was founded by Matt and Liz Faircloth in 2004. Their journey began with the purchase of a modest duplex just outside of Philadelphia, fueled by a $30,000 private loan. Since then, they have mastered the art of optimizing properties for their highest and best use, revolutionizing single-family homes, multi-family residences, apartments, mixed-use spaces, and retail outlets, as well as offices. This interview was conducted with Herve Francois.
CFPA: Can you tell us a little bit about your company? What does your company do and at what stage is it?
Herve Francois: DeRosa Group is a real estate investment company that invests in large multifamily apartment complexes. Our motto, "Transforming Lives Through Real Estate" is all about improving the living situation of our tenants by providing them an attractive place to live. Our company has been around since 2007.
CFPA: What's the market in which you see your company operating?
Herve Francois: We operate in Southeast U.S.
CFPA: Your company completed a regulated investment crowdfunding campaign. Can you tell us some info about the your crowd-raise (timing, amount, number of investors, was it a success?)
Herve Francois: We engaged a Crowdfunding platform in December 2020 to provide the opportunity for retail investors to participate in an apartment complex we purchased in Winston-Salem, NC. We gave the platform the opportunity to sell $1M worth of shares to their retail investors (approx. 100 investors). Unfortunately the experience was not a success.
CFPA: What made you decide to pursue investment crowdfunding?
Herve Francois: We believe all investors regardless their net worth should have the opportunity to invest in private real estate deals so they can have alternative assets (besides stocks & bonds) to add to their investment portfolios.
CFPA: On which platform did you raise?
Herve Francois: We raised the capital on Republic.co.
CFPA: Can you speak to your experience raising on that platform? What sort of advice would you give to other issuers considering that specific platform?
Herve Francois: Unfortunately we did not have a good experience on Republic.co. One of the biggest issues was the level of difficulty we had in making distribution payments to their retail investors because of lack of contact & bank account information. There was also a lot of cumbersome changes to our original Operating Agreement that we had prepared for our Limited Partners.
CFPA: How did you get the word out about your company during the crowd-raise? How did you go about your marketing?
Herve Francois: We employed our own email campaign to our investors about partnering with Republic.co for the crowdfunding raise. We also discussed the opportunities on our weekly investment webinars.
CFPA: What do you feel was your biggest challenge during your crowd-raise?
Herve Francois: One of the biggest challenges was the constant changes to our Operating Agreement driven by their attorneys (which caused a lot of back and forth with our attorney).
CFPA: Were there any surprises, good or bad, that you encountered during the fundraising process?
Herve Francois: Positive experience - through selling shares of our deal on Republi.co (we raised approx. $450k), it showed us that retail investors definitely have interest in investing in private real estate deals. Negative experience - Legal & Company Support.
CFPA: What advice would you offer any other companies considering regulation crowdfunding?
Herve Francois: Make sure you they can accept your Operating Agreement in its current form. Also make sure you they will give you contact info of their investors so you can have direct communication with them. Lastly - make sure the minimum investment you request is an amount that outweighs your operational cost per investor.
CfPA: Thank you Herve for participating in the CfPA Issuer Interview Series.