View Full Version : Investing In Real Estate Through Crowdfunding

Jilliene Helman
11-27-2013, 04:44 PM
Crowdfunding is one of the new buzz words to hit the financial services industry and it is now being applied to real estate. Through crowdfunding for accredited investors with sites like Realty Mogul (http://www.realtymogul.com), investors can pool money together and buy shares of real property like apartment buildings, office buildings and retail centers. Rather than buying the entire property and dealing with the hassles of tenants, toilets and trash, individuals investing through crowdfunding do not deal with any of the day-to-day management of the property.

How is it different than a Real Estate Investment Trust (REIT)?

When investing in a REIT, most investors have little to no information regarding actual properties the REIT invests in and cannot invest in their own backyard. Through crowdfunding, investors can invest in individual properties, allowing for added transparency and control over investment selection and location.

In addition, REITs are such large entities that they can rarely participate in many of the smaller investments crowdfunding opportunities will offer, such as niche retail centers or multi-family buildings with 10, 20 or 40 units.

When you invest in real estate through crowdfunding what do you actually own?

Most often, you will own shares in a limited liability company (LLC). Itís typical for individual properties to be held in sole and separate LLCs and most crowdfunding companies are taking this same approach. Investor monies are pooled into a single purpose LLC and that LLC invests into the property. This provides protections for investors, including a limit of liability, and streamlines the reporting and distribution processes.

When can investors expect distributions?

Timing for distributions will depend entirely on what type of property is being invested in. Some crowdfunding websites are focused on ground up development where distributions should not be expected for 18-24+ months. Other real estate crowdfunding companies, are more forced on cash flow and anticipate providing distributions as early as monthly on some transactions.

One of the great benefits of crowdfunding for real estate is added diversification and insider access to private transactions that were historically limited to the extent of oneís personal network. With the advent of the internet, investors will now have the ability to easily invest across geographies, across property types and across operating partners. While crowdfunding may not be easily applied to every industry, real estate seems to be one industry where it is poised to grow rapidly, and Realty Mogul (http://www.realtymogul.com) has become one of the leaders in this young industry.

11-27-2013, 05:03 PM
I personally love the idea. I have not invested yet in real estate via crowdfunding, but I do agree this is an upcoming segment for investors. The ability to get several small chunks of properties via sites like Realty Mogul, allows us to diversify our holdings. Spend $200k on a house, or $10 on 20 properties? Seems like the latter is a safer, more secure bet. Thanks for the information. Seems like Realty Mogul is the leader in this niche so far.

02-02-2014, 11:50 AM
I love this idea, unfortunately for someone like me who is not an accredited investor I cannot take advantage of this and sign up. I was really hoping i could diversify my current investments by becoming a member on realty mogul.

02-16-2014, 10:32 AM
ma7k. Intrastate exemption are in the works. Be patient and you will have the opportunity. Also, if you find a local Angel Investor group now. You can volunteer to help them with due diligence and other club duties. You benefit from learning the language and process of startup investing. If you work hard and prove yourself, you will find that there are other ways to invest in startups before you become accredited. Go find an Angel Group today, work hard, the world will change for you.

02-17-2014, 08:00 AM
Thanks for the advice eyeofthecrowd, you are correct now is the time for me to learn the language and the business. I'll continue to investigate, and read up on these new opportunities. I'm in the New Jersey, NY region, heres to hoping I can find a local group perhaps in NY which I can align myself with.

02-17-2014, 09:36 AM
Looks like 6 angel groups are in New Jersey. Best advice is to check out all their websites. See which ones teach new Angel Investors and have active calendars. Then just volunteer to help with whatever. Event setup, registration, due diligence, background checks, etc. This link has a list for you. I will respond to your PM a bit later today. http://newjersey.americanentrepreneurship.com/directory/browse/angel-investor-groups-21.html

02-20-2014, 08:33 AM
Now day real state is the best field for investment money,because no any chance you will be get the loss.Then just volunteer to help with whatever. Event setup, registration, due diligence, background checks, etc.

02-21-2014, 10:54 PM
This is an interesting spin on crowdfunding and shows just how it is going to reach into more and more areas of 'traditional' investing and financing. I'm glad to see these kinds of opportunities in the market...hmmmmm...my wheels are spinning a bit now :)

Salvador Briggman
02-26-2014, 03:08 PM
Look forward to seeing the growth of real estate crowdfunding. Recently put together a short list of some of the top platforms. Do you think they are in the right order? http://www.crowdcrux.com/top-real-estate-crowdfunding-websites/

05-22-2014, 10:53 AM
We have just launched our crowdfunding site for real estate in Germany. www.crowdstein.com

08-04-2014, 06:38 AM
Hello, I would like to introduce a company whose crowdfunding opportunities allow investors to earn the level of returns usually achievable only by those investing very large sums.This is International Commercial Investment (http://www.international-commercial-investment.com).
I hope that you find some interesting information there.

Ed Blaze
08-07-2014, 07:32 PM
Awesome idea

08-26-2014, 12:28 PM
Very cool idea. Used to raise money for real estate investments. Definitely going to take a look into this as a possible avenue. Thanks for the info.

Pace Abbott
08-27-2014, 08:19 PM
i would love to see it hit the real estate market and be able to turn into viable businesses.