By now you have heard of Kickstarter or Indiegogo as tools for the creative class with little available capital to fund their ideas and dreams. But have you heard of Fundrise, Realty Mogul, RealtyShares or CrowdStreet ? Think of these and other real estate crowdfunding websites as the marketplace where small investors can tap into real estate investments made by the professional teams of real estate investors who operate the websites. Real estate crowdfunding differs from REITS in that a REIT is a pool of properties with little transparency to each individual property and its performance and often invest in very large projects. The crowdfunding investments are specific to a particular property and each investor can monitor the performance of the property and the management of the investment and the properties tend to be smaller.
While you might want to be investor, we think that many of our readers may be interested in the opportunities presented by this alternative sources of capital. Add these websites and similar websites to your lender/investor lists for your next project. The rates are going to be on the higher side (10-14%) but the cost is offset by the immediacy of the funding and ability to move your project ahead.
Either as an investor or as a borrower, read the fine print, do your due diligence and ask lots of questions. Some websites only accept accredited investors and all of the investments are setup as exempt offerings. So, while this may be a new channel for reaching out to investors and borrowers, the actual investment and loan may look just like we have seen for many years.
The link to the videos below are not an endorsement of these particular websites, but presented only as an examples of the concept of real estate crowdfunding. Be careful and consult your professional advisors.