MSR Answers Questions about Real Estate Investments from Key Investors with HeZhongChou (a Leading Personal Wealth Management Platform in China)

MSR Answers Questions about Real Estate Investments from Key Investors with HeZhongChou (a Leading Personal Wealth Management Platform in China)

Posted on: December 1, 2015

Commercial InvestmentDuring their recent visit to China, the directors of MSR Holdings, Sunny Matharoo and Narinder Seehra met with executives from HeZhongChou, a leading personal wealth management and crowdfunding platform headquartered in Beijing.

Market drivers such as rising demand for overseas real estate investments, children’s education, and wealth management are prompting more and more Chinese individuals and institutional investors to shift their focus to overseas investments.

The MSR team visited HeZhongChou in China to join forces and combine our respective expertise in the North American and Chinese markets to create a brand new overseas real estate investment product. This strategic partnership will bring diversification and fill the gap between the growing demand for overseas investments and the stabilization of supply in the Chinese market. To that end, our directors met with HeZhongChou’s investment clients, getting to know more about their honest opinions and investment needs.

Below is a translated transcript of our interactive interview with HeZhongChou investors:

HeZhongChou – Intelligent Capital Management Platform: Enjoy the All New Wealth Management Experience Brought about by the Internet Era

As a leading wealth management crowdfunding platform in China, HeZhongChou has already extended its businesses overseas, excelling in the integration of the Internet, an innovative and customized product model, and strict risk management  measures. This model has allowed HeZhongChou to gather 100,000 validated users in a short span of time, focusing on different investors by promoting a diversified range of products. Investors’ capital is professionally managed by a well-recognized third party payment company, ensuring the safety of the users’ capital.

The HeZhongChou platform is diversified with products of different liquidity, investment thresholds, and rate of return, where clients can flexibly allocate their capital to investment packages according to their capital liquidity requirements and required rate of return.

The exclusive commercial real estate projects that MSR have to offer are in perfect alignment with HeZhongChou’s investment philosophy.

“Down-to-Earth” Interaction with HeZhongChou Investors

For this discussion, we especially invited Miss Hou and Mr. Wang, who both invested in the Ocala Medical Building, an MSR project that was offered through HeZhongChou’s online crowdfunding platform.

As representatives of investors in overseas assets, Miss Hou and Mr. Wang have brought forward a series of questions for the executives of MSR:

Narinder (MSR): Miss Hou, why did you choose to invest in overseas properties through the HeZhongChou platform?

Miss Hou (overseas assets investor):

HeZhongChou is a platform that I trust. I exited early on previously bought products and got a 20% annualized return, earning my initial trust in HeZhongChou. The overseas investment products that I subsequently purchased provided me with dividends distributed quarterly, which enabled me to regard HeZhongChou as a solid and trustworthy platform.

Overseas investment products possess higher yields, and I would like to manage my surplus income. Since our child is still young and has the possibility of studying abroad in the future, we want to start knowing more about foreign real estate markets and maybe continue purchasing overseas properties in the future. HeZhongChou provided the chance to try out overseas real estate investment opportunities with a small amount of initial capital outlay, allowing me to experiment.

Actually, there are multiple forms of overseas investments such as foreign exchange or stocks; what are your views on other overseas investment options?

Narinder (MSR):

The stock market is a more volatile and higher risk market. From a long term perspective, various economic indexes point to a stable economic recovery for North America. After weathering the financial crisis, the US real estate market is placed under more stringent regulation. Since the current housing prices are artificially lower than they should be, now is a great time to enter the US real estate market. I strongly recommend you allocate some capital into investing in US real estate assets. You can also allocate a small portion of capital into stocks and foreign currency within your own portfolio. .

Mr. Wang (overseas assets investor): Regarding exchange rate questions concerning overseas investments, if the future exchange rate fluctuates, won’t the investments be exposed to great risks?

Narinder (MSR):

Foreign exchange does not have a huge influence on long term investments because you can always find a relatively appropriate exchange rate at the right time and convert the currencies. Foreign exchange rate fluctuation has a greater influence on short term investments, and I recommend you keeping a USD account for convenient currency conversion when desired.

Questions from online investors: Overseas real estate investments yielding high rate of returns is great, but at the same time, being unable to see the property you are investing in is still unnerving. Are there any ways I can check and verify if the property I invested in really exists?

Sunny (MSR):

All of the invested funds are directed to the lawyer’s account. A lawyer is an impartial third party, you are free to choose to employ your own lawyer or work with one who we have been working with for a long time. North America has stringent laws governing and supervising lawyers, and if there are any problems with funds in a lawyer’s account, this lawyer can have their license revoked and therefore unable to practice.

Also, you can entrust any lawyer to look up the owners of any property through government websites. This is transparent, open, and easy to verify. Therefore, if you invested in a certain property you can verify true ownership. Since it is easy to check and verify and nobody can falsify these records, investors can be rest assured it is safe to invest with us.

Mr. Wang (overseas assets investor): I would just like to confirm the source of income of the US medical real estate investment project that I invested in.

Narinder (MSR):

Your income is comprised of two parts, one being the rental income. The US medical real estate investment project is rented out to the US Government’s Department of Veterans Affairs on a long term lease, and every quarter you will receive rental income. All of the rental income is distributed back to the investors and as the management company, MSR only receives a monthly management fee. We forecast that when the rent gets raised in 2018, your portion of rental income will also increase.

The other income comes from property appreciation. According to historical economic data and present economic conditions, US housing prices will continue to rise in the future. If the capitalization rate decreases to a reasonable level, then the equity uplift over a 5-year investment period would be significant, and this is the second part of your source of income.

Therefore in conclusion, your source of income includes both rental income and income from capital appreciation.

Miss Hou (overseas assets investor): In your opinion, what should Chinese investors pay attention to when investing in overseas real estate properties? What about risks?

Narinder (MSR):

Actually as the management company, we have already done all in our power to research and fully consider the market risks during the project screening process. Moreover, there are also risk control measures to check the validity and reliability of all materials during the project screening phase by the HeZhongChou platform.

Also, as I mentioned earlier, if investors have any concerns, they can look up the owner of any property through a lawyer or go on a field trip. We can say that we have done our very best in terms of risk control. As investors, all they need to check are certain crucial legal documents and that the project party has done everything in its power to investigate, in addition to choosing a reliable platform.

Questions from online investors: Currently wealth management products on other platforms offer guarantee measures, do your products offer any kind of guarantees?

Sunny (MSR):

If investors invested in US medical property investment products, then this investor truly becomes the owner of this property with their respective % ownership. Other financial products do not necessarily let you truly own the asset, but as the owner, you have certain ownership rights over this property. This is decided by the market, but we calculate our rate of returns based on detailed and reasonable analysis of the market. We promise and can demonstrate to you that you are definitely a legal owner of the property, you will get good quality tenants and you will also share the rental income with other investors.

Narinder (MSR):

I would like to further explain our investment logic to the investors. In Canada, the mentality to investing in real estate is to be the developer, since the costs are low and sale prices are high. In the US, investing in real estate means buying low and wait for the appreciation.

Narinder (MSR): You are still quite young, what made you put so much emphasis on wealth management?

Mr. Wang (overseas assets investor):

I mainly manage the money for my parents. Their idea of wealth management is a bit old fashioned and they don’t understand new things like overseas investment, so I want to help my parents manage their money. Moreover, HeZhongChou is a way to try overseas investment with a low threshold. Now more and more people around me are studying or working abroad, so people are getting increasingly confident and well-versed about overseas markets, including me, who came back to China from studying in the US.

Miss Hou (overseas assets investor):

I would like to add that we invest the remainder of my and my husband’s salary, as we would like to accumulate more for our child’s future while guaranteeing our standard of living. Furthermore, with the serious Chinese real estate bubble going on and house prices not rising and falling radically anymore, we feel that the North American market is more stable and therefore more reassuring to invest in.

Sunny (MSR): Why do Chinese investors dislike making long term investments?

HeZhongChou:

This is also a process of building trust. In China’s investment environment, the governing laws are not yet fully developed or perfected, which is why it is hard to build trust with the investors. Investors often don’t feel a sense of reassurance with long term investments. Some economies have a more developed due process landscape than others.

Narinder (MSR):

Long term investments are the real value of investment.

HeZhongChou:

Yes, this also involves the question of investor education. We hope that more investors get to know us and trust us, just like Miss Hou. Once they get to trust us, they will realize their capital is safe and secure.


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