Read this article to find out about the history of real estate crowdfunding.
Crowdfunding is the gathering of large numbers of individuals investing small sums of money to finance a new business venture. This is usually done via various investment firms through social media and other online forms of marketing. I’m sure you’ve heard of Kickstarter, which is using investors’ money to raise goals for some companies as they expand. Crowdfunding companies also operate for equity investments.
Crowdfunding is a little different from real estate. Real estate crowdfunding is pooling other investors’ capital to invest in various forms of property. Such properties may be REITs or other forms of private equity properties which are available through crowdfunding in real estate.
Let’s learn more about the history of crowdfunding in real estate. Real estate crowdfunding has been around for a very long time, but it was only accessible through private equity deals, and such transactions usually needed huge sums of capital, so they weren’t open to your average investor. Originally, these real estate investments were just REITs open to your average investor – and these REITs usually have higher fees and aren’t as diversified as some of the crowdfunding deals in real estate.
Recently, a revised legislation was passed in 2012. This law has helped people like yourself and me to invest in crowdfunding for real estate. This is called the Jobs Act, passed in 2012, and it states that accredited and non-accredited investors can invest in crowdfunding of immovable property thanks to this legislation.
And what it has done is basically create a whole new platform for the regular investor to invest in crowdfunding for real estate. It’s changed the real estate crowdfunding landscape. While it was available only to your certified investor before, it’s now open to your everyday investor.