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  1. #1
    Senior Member
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    Sep 2016
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    Can a company raise money through equity crowdfunding to buy real estate?

    Can a company raise money through equity crowdfunding to buy real estate?
    How should they go about the campaign?
    thanks

  2. #2
    Senior Member
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    Apr 2013
    Location
    Florida
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    Yes, you can use a debt or equity raise. The most common type of raise used for real estate is a REG D 506 (c) which has an exemption for "General Solicitation" meaning you can use social media etc to raise from accredited investors.

    Best you contact us and arrange a time to discuss in more detail.

  3. #3
    A few I am aware of. Hope this helps.
    PeerStreet
    Acquire Real Estate
    RealtyShares
    Fundrise
    RealCrowd
    CrowdStreet
    Alphaflow

  4. #4
    Senior Member
    Join Date
    Sep 2016
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    192
    Quote Originally Posted by Shane Liddell View Post
    Yes, you can use a debt or equity raise. The most common type of raise used for real estate is a REG D 506 (c) which has an exemption for "General Solicitation" meaning you can use social media etc to raise from accredited investors.

    Best you contact us and arrange a time to discuss in more detail.
    How do I contact you?

  5. #5
    Senior Member
    Join Date
    Sep 2016
    Posts
    192
    Quote Originally Posted by Roy View Post
    A few I am aware of. Hope this helps.
    PeerStreet
    Acquire Real Estate
    RealtyShares
    Fundrise
    RealCrowd
    CrowdStreet
    Alphaflow
    That helped. Thanks a lot buddy

  6. #6
    Member
    Join Date
    Jun 2017
    Location
    Roswell
    Posts
    42
    I don’t see why you wouldn’t, but there are some hurdles and complications you need to consider.

    Why would someone give money to you? What do they get in return? Will there be a specific note to a property you buy with their money? Will you just be guaranteeing them a certain return on investment, is it dependent on how profitable your company is? If so, do you have guidelines of how money will be spent (i.e. an investor would not be happy if the profit at the end of year is $0 because you paid yourself management fees of $100,000).
    My guess is you’re probably also thinking about buying these in cash. With an LLC, you’d have to get a commercial loan, which is possible, but rates and terms typically aren’t attractive enough to provide your investors enough of a return to make it worthwhile. Plus, if you are getting a loan, the lender will want to know what your terms are with your investors to make sure that they can be paid back and are the first lien on the property should something happen. Buying cash is definitely the way to go in my opinion, but you are going to be playing with some big dogs who are very well funded and been playing this game for awhile.
    Which brings me to #3… This was a hot game to get in maybe 8 years ago or so. Of course it depends on your market, but you will likely be competing against institutional money - millions or billions of dollars. You can definitely get in the game, you are just going to be competing against people that can pick up tons at one time. They also have the ability to buy portfolios where some properties may be killer investments, others not so much, but the aggregate is great (you just have to spend $100M for all of them, for example).
    I don’t know much about you and your situation besides whats in the question but my thought is this:

    You are talking about creating an app and website for people to rent properties. Pretty much like every other property manager of decent size. If that’s what you want to do great, go for it. But, you may want to start out doing that and building up a portfolio of properties you manage to create an income stream.
    Have the income stream will then allow you to qualify for a loan to buy these properties yourself. The commercial rates may still make it so you have to be selective on your properties, but at least you are not splitting the profit with others at this point.
    I would also suggest going the personal route to find an investor to get started, as opposed to crowdfunding. This would help you get started and build a reputation of being able to do what you say you are going to do, thus giving other investors more confidence in putting their money in. If you can get your initial investor to give you enough cash to buy one house outright, that person can be comforted with a note tied to the property - just in case you decide to get squirrelly on them.
    I like the idea and have had similar ones before. There are people out there with the same idea and much better connections to experts and funding sources who are already playing in this game. If you google it, you can find all types of ways you can passively invest your money into companies doing same type things. As you get bigger, there is a lot of legality to it you’ll have to consider, but my opinion would be to start small with some private investors to build up a name and solid business before going after a huge crowdfunding endeavor.

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