Small investors are flocking to crowdfunding property deals


CrowdStreet noticed a 50% jump in demand as the pandemic lessened the supply.

Small investors are flocking to finance real estate transactions
While the amount of crowdfunded real estate deals on offer has declined significantly in recent months, demand is strong for those remaining investment opportunities, such as the Baltimore Renaissance Harborplace Hotel (iStock, Google Maps)

Big investment funds are not the only ones looking for purchasing chances while the pandemic rages on. Thousands of individual investors are seeking to jump on the bandwagon via pooling platforms, too.

While the offered scope of crowdfunded property deals offered suffered a fall in recent times, the demand is still robust for those investments. Distressed deals popped up on the marketplace already, with price cuts as big as 20%.

Crowdfunding firm CrowdStreet saw a 50% increase in demand from investors as offers fell 70%, Chief Investment Officer Ian Formigle remarked to Wall Street Journal. One contract, to get to 12.5M dollars for a 24M dollar apartment venture in Washington, D.C., sold out in mere minutes.

The day they opened the investment to financing, demand exceeded $25M. We had to shut her down. Yet, the general drop in the volume of the contracts made the firm pay off one-fifth of their employees.

Developer Jamestown LP, which started a 50 million dollar crowd pooling fund in December, continued to get new contributions at a minimum of $2,5K per week. Investors are still searching for a product of this type, according to president Michael Phillips.

The majority of crowdfunding deals from these pandemic times, including CrowdStreet’s mentioned D.C. venture, were aimed at buildings with apartments financed with government-secured debts, which are considered more secure investments for these tines. Yet distressed assets in other branches continue to be interesting.

The Renaissance Harborplace Hotel in Baltimore, which had a pre-crisis agreement with Buccini/Pollin Group to be bought for $100M, now saw its cost lessened to $80M. And CrowdStreet is collecting over $15M for the purchase.