Crowd Funding as a RE Investment? Your thoughts?

[John Arendsen]

I tend to be the crawl before I walk type when it comes to new opps and have been keeping my eyes wide open when it comes to CF investments and reading and learning while sitting on the sidelines. Were I ready to step into the fray next year does anyone have any thoughts on where, who, when and what to align myself with as a greenhorn CF investor?

I'm and accredited investor and by no means new to investing. I have an appreciable RE and stock portfolio but I'm just looking at other ways of diversifying for the near and long term future. I've been looking at doing a little more in the stock market (i.e. options, new IPO's, robotics, lithium, Marijuana related investments, etc) as I've done quite well during the past 6 to 7 years.

However, just about anyone who could fog a mirror and took the ride up couldn't help but make money in that upwardly mobile market. But those days are over for now and I see the market slowing down perhaps even dipping. So I'm looking for some other ways to build on my investment portfolio.

Although somewhat cautious on sticking my toes into the honey dew I can be somewhat of an adventurer and don't mind investing in more speculative opps in smaller $$$ increments to start with.

However, in that event I'd want to be more hands on. As @J Scott has intimated on another thread on this subject he sits on the board of some of his investments. I tend to lean that way as well and don't mind jumping into the trenches and getting my hands dirty as I'm also a general & manufactured home contractor, manufactured home dealer and developer, real estate broker, investor and property manager. Dooe anyone know how one would get involved with investments such as this?

[Mark Robertson]

At this point you have to be accredited to invest.  There is a loophole that many investors are taking advantage of, but I predict it will be the downfall of many platforms in the future. 506b portals (ifunding, Realty Shares, Realty Mogul and Fundrise etc. ) allow investors to self certify.  506c portals (Real Crowd, Patch of Land, etc ) must use reasonable means to verify investor's accredited status before they can invest.   While the 506c  certification is a pain for all involved, it does allow the platforms to advertise and it does allow for the open discussion of the deals outside of the portals.

506b deals are easier to make the investment, but they do not allow any public discussion of due diligence materials and the portals will not even let web sites discuss returns after they are funded.  This lack of transparency is not good for the industry or investors.  In addition, once a few 506b deals go bad and it turns out there are non accredited investors in the deals, the SEC will come down HARD.

As far as crowdfunding investors being in first position, it depends. Every deal is different. Some are 1st position (typical HML) , some are in 2nd position (mezz debt) and some are in 3rd or 4th (equity deals). You have to look at each deal. In addition it gets more complicated because you invest in a LLC that then will invest into the deal. The LLC is in first position, not you per se.