Crowdfunding grows as real-estate investment option

By Brock Willis, The roller-coaster ride of residential real-estate markets in the last few years have a lot of investors thinking about the value of real estate, including commercial real estate. Not only does this sector have appealing growth potential, but the emergence of crowdfunding platforms in this space is making it possible for individual investors to start thinking about the possibility of adding commercial real estate to their investment portfolios.


Real Estate CrowdFunding: why it’s a big deal

Until recently, the only opportunity for smaller investors to get in on the action has been through Real Estate Investment Trusts (REITS). But crowdfunding is inserting itself into this space as a potential game-changer, breaking down barriers in the commercial real estate sector by making large-scale, quality real estate opportunities available to investors for as little as $5,000.

This is how it works. Developers will post their investment opportunities on a crowdfunding platform, providing detailed documentation for vetting before being made available to potential investors online. Investors then browse pre-curated investments, legally formalize their transactions online, and can check in whenever they want to see how their investments are performing.

Leveraging a crowdfunding platform increases efficiencies for investors as well as developers who now have a new way to finance projects. It’s a win-win for all parties.

And there are compelling reasons for non-accredited investors to be interested in this sector.

Commercial real estate applications are currently available only to accredited investors, which are defined by various countries’ securities laws, specifying the types of higher risk investments they are allowed to participate in. But regulatory changes in the U.S. are expected to provide developers with access to new capital and investment opportunities for individual investors through equity fundraising. This change will have ripple effects around the globe.

All of this bodes well — both for closet mini real estate moguls and industry players. Stay tuned!




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