Bringing commercial real estate to the crowd

 

Photo Courtesy of Public Domain


By Jilliene Helman

 

Mutual funds, commodities, individual stocks and bonds – all of these have for years been the object of investments by ordinary individuals. One asset class, though — commercial real estate — has continued to primarily use larger investors as a financing source. Sponsors of specific real estate projects usually seek money from groups or entities able to invest significant amounts — in part, so that those promoters don’t have spend time on numerous individual investor reports and inquiries. Until 50 years ago, most large properties continued to be owned by financial institutions, pension funds, life insurance companies, and a few very wealthy individuals. After the development of real estate investment trusts (“REITs”) in 1960, broader individual participation in commercial real estate became better available – yet even then, most REITs are holders of “pools” of assets, and it‘s still not easy for smaller investors to play a part in individual project syndications. Only recently has communications technology and its facilitation of “crowdfunding” enabled smaller investors to participate more broadly in specific real estate investments. The internet has made possible wide access to news, information, products –- and real estate investments. Through an online platform like the one provided by Realty Mogul, people can now review real estate investment projects at their convenience – say, sitting with their laptop or tablet at the kitchen table at 10pm, after the kids have been put to bed. Previously, introductions to these opportunities might have required specially arranged meetings with attorneys, bankers or financial advisers – that is, if the person had such connections at all. The ability of smaller investors to conveniently access “deal flow” directly has enabled vast numbers of “run-of-the-mill” investors to invest in larger or higher-level real estate projects than ever before. Just as such opportunities had been generally more difficult to access, they were also often still limited to institutions or persons of very substantial wealth. A project syndicator seeking $2 million in equity wouldn’t typically concern himself with contributions of $10,000 or $20,000; rather, he would search for investors able to contribute ten times those amounts, in order to simplify his task of managing investor updates and distributions during the life of the project. Technology, however, has enabled large numbers of unrelated investors to pool their contributions and make a significant investment through a single legal entity – keeping things easy for syndicators while broadening the source of potential investors. The illiquidity of most real estate investments has also contributed to investors often receiving only infrequent reports on a project’s status. The internet, though, makes it easy to access centralized information, and crowdfunding sites like Realty Mogul allow investors to do status checks and review project updates on a 24/7 basis. This in turn permits the investment to be more transparent, enhancing investor trust and thus creating a virtuous circle whereby the investor base is increasingly broadened. An investment offering recurring, passive cash flow is often an attractive one, and commercial real estate can frequently offer a good source of such returns. Average investors, though, have not always been able to participate in such opportunities other than through a REIT holding a pool of many different properties. Crowdfunding sites aimed at the real estate sector, such as Realty Mogul, can now permit smaller investors with no previous industry connections to play a part in specific real estate opportunities — and at smaller contribution amounts than were formerly practicable. Technology can be a wonderful thing.

jilliene-helman1-e1366834209466-150x146

Jilliene is the CEO and Co-Founder of Realty Mogul. Previously she was a Vice President at Union Bank, where she spent time in Wealth Management, Finance and Risk Management.

Jilliene is a Certified Wealth Strategist® and holds a Series 63 license. She brings real estate and finance experience to the team and is incredibly excited to share real estate investing with a broader group of investors.

She has a passion for travel and has lived in five countries and speaks three languages.

She holds a degree in Business from the McDonough School of Business at Georgetown University.

 

HEADLINE NEWS

ForbesThe Ultimate Pre-Launch Crowdfunding ChecklistForbesCrowdfunding is not limited to the platform where you launch your campaign. Instead, it has become a valuable way to transform your idea into a mainstream business. In order to head in that direction, you must execute a number [...]

The AustralianIgniteme heats up crowdfundingThe Australian“The only other comparable film that raised money through crowdfunding would be Crocodile Dundee, but not all funding came from the crowd.” Mr Morello said the idea behind the platform was relatively simple — giving new and bud [...]

DVS Gaming (registration) (blog)Crowdfunding: How Does it Help Indie Developers?DVS Gaming (registration) (blog)2012 is when crowdfunding really blew up, prior to 2012 the average amount of money devs would receive could range from 10k-100k. By today's standards, that's stil [...]

The MemoCrowdfunding has become a 'monster' argues its greatest criticThe MemoBrown has become a thorn in the side of this blossoming industry, even more so as it's clear his blog is now even read by regulators at the Financial Conduct Authority. The Memo sat down with [...]

U.S. News & World ReportNo Cash for Hate, Say Mainstream Crowdfunding FirmsU.S. News & World ReportThe block on mainstream crowdfunding is just the latest blow to far-right activists operating online. In the last 24 hours, neo-Nazi website the Daily Stormer had its domain regi [...]

LivemintFinding the right balance on crowdfundingLivemintSecurities market regulator Sebi (Securities and Exchange Board of India) has been trying to get a handle on digital platform-based crowdfunding since at least 2014, when it issued a cautiously positive consultation paper. It fl [...]

Crain's Cleveland Business'Smaller' gifts can go long way for Clinic's crowdfunding platformCrain's Cleveland BusinessFor an institution accustomed to securing multimillion-dollar donations, Cleveland Clinic's latest fundraising effort has some relatively [...]

Australian Brews NewsBrewery crowdfunding effective overall: PozibleAustralian Brews NewsEquity crowdfunding by breweries overseas has been effective overall, despite some high profile failures, according to Pozible. The largest reward-based crowdfunding platform in the Asia Pacific, [...]

FortuneUncensored Social Network Gab Raises $1 Million in Crowdfunding CampaignFortuneA crowdfunding campaign for Gab, a Twitter-like social network that touts its commitment to freedom of speech, surpassed $1 million yesterday. The company claims it is politically neutral and committ [...]

Crowdfund InsiderIsraeli Crowdfunding Platform ExitValley Self Crowdfunds, Plans UK ExpansionCrowdfund InsiderThe digital platform to book parking anywhere raised $2 million – a portion of that, $270,000, reportedly came from ExitValley. To date the self-crowdfunding offer has raised [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |