Real estate startup Justo Inc. is getting a funding assist from a group of investors that includes all-star Toronto Maple Leafs forward Mitch Marner.
For Mr. Marner, who turned 23 in May and signed a six-year US$65.358-million NHL contract prior to the 2019-20 season, the equity investment is about planning for the future.
“Hockey is not going to last forever. For me, it was just seeing an opportunity here and seeing something I think is really going to blow up,” Mr. Marner said about his first venture investment. “This is what I’m really looking forward to doing, and get more involved with … it’s gotta be the right companies and the right picks.”
Justo, founded in 2017, is a real estate brokerage focused on the greater Toronto market with a couple twists on the traditional ways of doing business in Ontario: Its 10-person sales staff aren’t paid through commission, and the commissions the brokerage charges are discounted. The company won’t disclose the other investors in the group or the exact amount they have raised other than to say the total investment is in the single-digit millions. Robert Reichmann, also an investor in Justo who has served as the startup’s chief development officer since July of last year, said the company needs the money to boost its sales staff, marketing presence and digital infrastructure.
“Housing prices have doubled and commissions have stayed the same, there’s no good reason for it,” Mr. Reichmann said. “Our game plan is very much to disrupt the Canadian market in a significant way … we’re in our second year of active operations and have done $200-million in volume.” (Volume is not revenue – it’s a measure of the value of the homes bought or sold with Justo agents, on which Justo takes a small slice.)
Justo’s key pitch is that people who buy a house with one of its agents gets cash back in the form of half of the traditional buyer-agent commission. Selling and buying agents typically split commissions in Ontario, and in the Toronto region those fees vary: Where 5 per cent (split evenly) is typical, some agents offer more or less in commission. For sellers working with Justo, the commission is 1.25 per cent. So far, the company has handed back close to $2-million in cash to its clients.
Brokerages that give clients a discount on commissions typically offer less service to clients, but Mr. Reichmann says Justo is still a full-service brokerage on a slimmer commission and even offers extras such as free home inspections for buyer clients and free 3-D tours for sellers.
“Another thing that really sparked our mind – why we thought it was a really good fit – is that they told us they would donate a minimum of $100 [to Mr. Marner’s charity] for every home sold through the brokerage … that’s for a minimum of three years,” Mr. Marner said. “It felt like a company that’s not just an investment deal, it feels like a family deal in that you can be really close with everyone in the community and help everyone.” Mr. Marner’s charity, the Marner Assist Fund, has in the past run hockey tournaments for young people (cancelled this year owing to the pandemic) and has recently been helping to provide meals to front-line health care workers.
Mr. Marner, who was born in Markham, Ont. and grew up in Thornhill, says his father – a former realtor – has always stressed the potential of real estate. “Still to this day his thing to me is always real estate, and land will never go down in money,” he said. So far, Mr. Marner has bought a cottage and a house, a personal experience in paying high commissions that convinces him Justo’s approach will have legs.
Mr. Reichmann also has a deep family history in real estate: His grandfather was Albert Reichmann, one of the five brothers who came to Canada and the United States after the Second World War to build up Olympia and York Developments into an international property empire. It went bankrupt in the 1990s. In addition to founding Consequential – an investment firm focused on real estate innovators – Robert Reichmann is president of Reichmann Rothschild, a family office that manages private equity deals and philanthropic giving.
“We are not one of these unrealistic ridiculous tech startup companies; I take pride in the fact we are down to earth and realistic,” said Mr. Reichmann, who approached Mr. Marner initially through his management agency. “We’re not looking for dumb money, I was very happy with the reception to what we were up to and what we were doing. I don’t think [Mr. Marner] is making investments like this on a typical basis. I’m very excited about it. … I don’t want to question it too much.”
It’s somewhat unusual for young athletes to be focused on a posthockey career and portfolio, but Mr. Marner credits his former teammates for getting him thinking about his financial future.
“I remember Patty [Patrick Marleau] was always telling me about markets and watching stocks and all this stuff,” he said. “His thing was … obviously there’s going to be a day where you don’t play hockey anymore, and you gotta make sure that when that happens you can still run your life without going down the drain; you gotta make sure you’re ready to have backup plans that will help you out.
“Another [influence] was my parents, they were really big on that … of making sure that you build yourself a brand that when you’re done the hockey you can hop out of it and still work and still be successful.”
As the pandemic continues leaving the interrupted NHL season in limbo, posthockey planning seems like the head’s up play.
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