Aaron McDaniel is in the Shark Tank to talk about Tycoon Real Estate. He says that while real estate is a great way to build wealth, but the traditional way is difficult, intimidating, and expensive — and only available to the super wealthy.

He says Tycoon is a crowd-investing platform that allows ‘everyday people’ to invest in real estate for as little as $1000.

Unfortunately for Aaron, his pitch wasn’t going too well. The sharks weren’t impressed with scare tactics about only wealthy people being able to invest in real estate, and Mark Cuban announced, “I hate it. I’m out,” only moments into the Tycoon presentation.

He wasn’t alone. “I smell jail time,” Kevin O’Leary called out.

Aaron pressed on, with Barbara Corcoran’s encouragement. He explained that investors would go to the website and pick an amount to invest, go through online forms, and once there were enough investors for a given project, it would go forward, giving investors the opportunity to gain a profit.

“We’re on the brink of an exciting new era where literally anyone can be a real-estate tycoon!”

The offer to the sharks is 5% of the company for a $50,000 investment.

Robert Herjavec was the first to offer a (specific and clear) concern. “Walk me through this. How do I get my money back?”
The other sharks chimed in with more questions. Who would decide the percent of the return each investor got? Does Aaron take a fee, and how much? How many buildings have they already funded this way?

He explained that each project has a lead investor, who makes the specific plans, and that management takes a fee equal to 1.25% of the investment. As for how many projects have been funded — well, the company has managed two. One of these was for $100k, for ‘part of a house’ in San Francisco.

Kevin asked why anyone would do this, instead of going to a big bank to invest in a REIT — a real-estate investment trust, on which he would gain a 4.5% return, and could take his money out whenever he wanted.

“REITs aren’t sexy,” Aaron insisted, causing sharks to sigh, shake their heads, and talk over one another about how sexiness is the wrong focus in investment.

Herjavec, hinting that the model would likely be attractive to the very people who needed to keep their funds in safer accounts, said, “I’m out.”

McDaniel insisted that his model was a conservative form of investment, and would protect investors, even as the sharks argued that he was wrong. Mark, despite already being out, spoke up to point out that this was dangerous to ‘people like grandma’ who would invest all they had, then need the money in an emergency, and be unable to get it.

Lori Greiner was the next to flatly decline. She said she felt uncomfortable going into an investment online with a bunch of strangers, “…and for that reason, I’m out.”

Barbara Corcoran said the problem was with the lead investor — without knowing who that was, how would one know whether to invest with him? “That’s what’s scary, and that’s why I’m definitely out.”

Kevin wasn’t done hinting that the model was less than savory. “Do you have any criminal record whatsoever?”

Mark interrupted to talk about the company’s name: “Tycoon! It’s a rip-off name!”

Kevin went on to say that the reason that people invest along with him is that he puts his own money in every deal, and has a brand that people can trust. But he made an offer: he’d invest $50,000, for a 50% stake. “I’m gonna re-brand this thing.”

Aaron turned down the offer.

“I’ve forgot your name already,” Kevin called after him, as McDaniel left the Shark Tank with no deal for Tycoon Real Estate.

(McDaniel made a quick appearance afterward to assure viewers that the sharks are wrong, and that Tycoon isn’t a sleazy company and isn’t looking to swindle money from anyone.)

[photo credit: kristiewells]

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