Crowdfunding

[Lisa Henrich]

Has anyone ever used crowdfunding to finance real estate?  If so, was it successful?  I currently work full-time and have two rental properties.  I would love to acquire more properties in a timely manner...without just having to save up the cash for the acquisition.  Any insight would be great.  

Thanks!

Lisa

[Andrew S.]

Originally posted by @Lisa Henrich:

Has anyone ever used crowdfunding to finance real estate?  If so, was it successful?  I currently work full-time and have two rental properties.  I would love to acquire more properties in a timely manner...without just having to save up the cash for the acquisition.  Any insight would be great.  

Thanks!

Lisa

 There are many portals that specialize in crowdfunding real estate (search here for many examples and threads).  However, these types of funding sources are much more short-term than you'd likely want to consider for a typical buy-and-hold, unless you are ready to refinance out after say a year or so.  They are more akin to hard-money loans.

[Charles Clinton]

I've spent a lot of time researching the industry and I'm not sure I agree with Andrew. Don't get me wrong, some of these platforms are definitely just online hard money lenders, but some work with more varied structures. 

Lisa, what's your experience level? Do you just own the two rental properties? Each site has its own underwriting criteria but the reputable ones put significant effort into underwriting the sponsor to make sure they have significant track record and experience.

[Awen Thomas]

Hi,

Yes, I have used Crowdfunding Campaign for a real estate. There are a lot online Campaigns (Patch of Land, Fundrise, Realty Mogul, Asset Avenue, RealtyShares), which are specialized in real estate Crowdfunding. These Crowdfunding campaigns makes real estate investing easier and more accessible for investors. So, without any doubt, you can use Crowdfunding to invest real estate.

Thanks!!

[Bryan Thompson]

Hello all, 

Question, Is there a limit of how much a platform like ifunding and fundrise can lend my company in one year? Hope to hear from someone experienced with this on multi million dollar commercial property deals

[Emma Watson]

I think real estate crowdfunding is an excellent way for retail investors to take part in the other area of real estate investment and real estate development which previously was only accessible to funds and institutions.

It offers retail investors with greater possibilities and developers with the avenue to raise funds from the public.

Also you can check out the below links:

http://time.com/money/3906524/4-secrets-of-crowdfunding-success/

http://www.forbes.com/sites/groupthink/2014/08/19/the-investors-guide-to-real-estate-crowdfunding/#2715e4857a0b9f0c1684dd70

http://crowdfund.co/real-estate/

https://www.realtyshares.com/How-to-Succeed-With-Real-Estate-Crowdfunding

[Ian Ippolito]

@Lisa Henrich, Real estate crowdfunding can be an excellent way to diversify your portfolio. Most likely you are limited to your local area for your rentals, and if so you are overexposed to regional risks. Crowdfunding allows you to pull from a national source of investments, so that your exposure to any one city or region is limited and gives you a safer, more diversified return. Also, the entry points are lower (sometimes as low as $1000), so instead of buying one property, you can diversify into several for the same amount of money. Again that's safer. The other advantage is that it's completely passive, and someone else manages everything for you.

The downside is that you are not in control of the management of the properties which can be an issue for some people. You have to be able to evaluate the manager and feel comfortable that they will do a good job on your behalf. If you don't want to do that, then crowdfunding is not a good option.

Also, @Andrew S.was incorrect in his impression that crowdfunding is only for hard money loans. Virtually every single type of real estate investing is representing crowdfunding: equity versus debt, residential versus commercial, short-term versus medium-term versus long-term, etc.. For a while there were no good buy-and-hold opportunities, but even that gap has now been filled with sites like 1031crowdfunding.com.

If you have any other questions, just let me know.

[Ryan Cooper]

I would suggest using a platform that focuses on the area of investing you're interested in. A lot of the platforms have different types of property types and investment requirements (The most common I've found was $5000 with a commercial property focus). It ultimately depends how much you're willing to invest initially and your time preference. Please direct message if you need any assistance or directions!