Real estate arrived onto the crowdfunding scene.
Crowdfunding has made sites like Kickstarter and Indiegogo popular, and that’s basically that is what you think when you think about crowdfunding. The truth is, crowdfunding is not just about cool gadgets and smart entertainment. In reality, real estate has also become a part of the major crowdfunding market. Trillions of dollars of institutional capital are invested in real assets such as apartment buildings and shopping centers, and a large chunk of that money flows online to these crowdfunding real estate platforms.
RealtyMogul, based in Los Angeles, works with individual and institutional investors to help link borrower and sponsors get to profits. Back in 2013, it was among the first crowdfunding sites on the scene.
This is not investing blindly. RealtyMogul visits each property in person, and works with partners with proven strategies. They deal primarily with already leased properties and with both accredited and non-accredited investors. But, the choices are limited to REIT funds for non-accredited investors. Total investment varies from project to project but can be as low as $5000.
With a five-year time span, Fundrise and its crowd have invested tens of millions of dollars in real estate, including the famous new World Trade Centre.
This is not only about purchasing assets but about developing them. The goal of Fundrise is to purchase properties for less than what it would actually cost to replace them. They’ve more than 75 years of team experience. For as little as $500, you can invest in here and the screening process is topnotch. Just about 5 percent of Fundrise’s proposals are approved.
Non-accredited investors are welcome but they do not have access to the full range of deals from Fundrise.
Invest as little as $25,000 in professional real estate deals at CrowdStreet. Created in 2014 by CEO Tore Steen and VP of Business Development Darren Powderly, CrowdStreet has reported an average 1.9-year holding period on 379 commercial investment properties on its market place. CrowdStreet is actually only available to accredited investors, and through the site they have raised more than $870 million.
The platform comes with a nice selection of online resources, and if you need it, expert assistance is available. There is no charge to enter the CrowdStreet marketplace and every opportunity has been thoroughly investigated.
Investments at Groundfloor are based on real estate developers who have been vetted by the firm and pursue financing for their projects. Groundfloor finances the loan, turns it into a security called an LRO, and investors choose to engage in which LROs they want. Groundfloor was founded in 2013, and welcomes both accredited and non-accredited investors. Investors can potentially get going on as little as $10.
Typical investment loans to real estate developers have, according to the firm, returned about 10 percent in time horizons as short as six to 12 months.
Based on the combined $3 billion of institutional real estate investment experience of its founders, RealCrowd originated from the prestigious Y Combinator incubator program.
If you don’t like too much risk, then that could be the source for you. RealCrowd only deals with businesses which don’t need your capital. They must have at least 10 years of experience and at least $50 million in transactional histories. Without your funds, they will close. And why would they partner with RealCrowd then? To get access to the investor network.
One drawback is that RealCrowd deals usually need a minimum investment of $25,000 to $50,000 and you’ll need to be an approved investor to participate.
Patch of Land was created by two brothers who wanted to support communities that suffered from the Early 2000s real estate crash. It’s a peer-to-peer platform that matches the investment opportunities for investors. Such prospects are high yield and short term.
The emphasis here is on projects that conventional lenders are sniffing at and turning away. One downside is that it only works with approved investors.
7. American Homeowner Preservation
Investors on AHP purchase pools of distressed mortgages from around the States, all backed by real estate, mostly at deep discounts. They don’t make direct real estate investments. This might be a perfect chance if you have a heart and want to help homeowners escape bankruptcy and obsessive debt collectors. They have an established track record of more than 10 years of experience. You can invest for as little as $100, and they are open to both accredited and non-accredited investors.
Crowdfunding Real Estate Is Not Risk-Free
As with any form of investment, crowdfunding in real estate can be heavily affected by the economy and the housing market. Both of these sites seem to have strong management and good track records, but be sure to read each site’s FAQs for the finer information about how they operate.