Real Estate Lender · Brooklyn, NY · Member since 2015 · 14 posts · 8 votes
Hi Bigger Pocket-ers, I know I'm supposed to introduce myself to the community as I start meeting new people and giving and receiving advice so here it goes: I began my real estate career as a real estate lawyer with Simpson Thacher, primarily working for Blackstone, KKR and a handful of other private equity clients. I left my legal career to jump into the new world of marketplace finance ( or as its more commonly called, crowdfunding) because I see incredible potential in the space. The market has already been flooded with companies trying to capitalize on the new opportunity but we're really only seeing the tip of the iceberg on adoption by real estate companies and investors and what this market will look like once it matures.
I joined BiggerPockets to interact with its large community of intelligent real estate professionals, entrepreneurs and investors and learn from the community's remarkable breadth of knowledge (and hopefully add to it a bit also). I'm excited to get started and would particularly love to hear any experiences, thoughts, questions or criticisms about crowdfunding.
@Charles Clinton I am in your camp on the crowd funding potential
I see some of the first in the space and one's that are leading the charge morphing into debt lenders or really HML ers. I think they will give the HML space some real competition.
Once they can take non accreds it will really blow up as the bigger they get the more competitive they can be on points and rates. .. although the bigger players are also landing Fund money as well.
Were they really shine is take my state Oregon.. we are not allowed to fractionalize Deeds of trust... so the CF through their portals and back end set up.. can fractionalize interest in a single deal.. fund in one name so your no breaking the law's ... and be paying out multiple investors who have small overship interests in the deals.. Us local lenders cannot do that.
Where our local HML must put one investor into one note.. or they need to raise a PPM type offering.. which can be very difficult with the rules for soliciting funds.
And or they need bank LOC facilities and the ORegon Banks we used to deal with stopped making those in 08.. I have not heard of a HML getting a new one since then.. a few kept some relationships but most lost their low cost of capital LOC's.
@Charles Clinton Welcome to BP! You have a great background and could contribute a lot to the community. We have a whole forum section on crowdfunding that you may want to get active in.
Welcome Charles, Your background is sure to be an asset in your new business ventures and to this BP community. The crowdfunding discussions are certainly active here. I've been following the Patch of Land opportunities, but haven't jumped in with any real money yet.
@Charles Clinton I am in your camp on the crowd funding potential
I see some of the first in the space and one's that are leading the charge morphing into debt lenders or really HML ers. I think they will give the HML space some real competition.
Once they can take non accreds it will really blow up as the bigger they get the more competitive they can be on points and rates. .. although the bigger players are also landing Fund money as well.
Were they really shine is take my state Oregon.. we are not allowed to fractionalize Deeds of trust... so the CF through their portals and back end set up.. can fractionalize interest in a single deal.. fund in one name so your no breaking the law's ... and be paying out multiple investors who have small overship interests in the deals.. Us local lenders cannot do that.
Where our local HML must put one investor into one note.. or they need to raise a PPM type offering.. which can be very difficult with the rules for soliciting funds.
And or they need bank LOC facilities and the ORegon Banks we used to deal with stopped making those in 08.. I have not heard of a HML getting a new one since then.. a few kept some relationships but most lost their low cost of capital LOC's.
@Charles Clinton welcome, your background is impressive and I look forward to more folks from the institutional side jumping into this emerging industry. Look forward to your insights
Wow! Really appreciate the warm welcome everyone. I'll definitely check out the crowdfunding forums and can hopefully add to those discussions. I'd really love input from you all too. Any thoughts/feelings/hesitations about crowdfunding?
Wow! Really appreciate the warm welcome everyone. I'll definitely check out the crowdfunding forums and can hopefully add to those discussions. I'd really love input from you all too. Any thoughts/feelings/hesitations about crowdfunding?
There is a lot of hype around crowdfunding (some of which is way overdone) but it has the potential to address some market needs, namely an alternative to hard money lending and access to direct property investments at more modest exposure. Technology speeds up the process and brings efficiencies, but at its core this industry is just a 21st century version of the real estate syndicates of the late 80’s. It’s important to not repeat the mistakes of that era but unfortunately we are not addressing some key problems.
One of the key problems is the inability to perform the same level of due diligence as traditional channels. I've written about this on our blog, which BP won't let me post, but I'll direct you to find it on our site if you want to read about our views on that matter.
Charles, I feel crowdfunding has tremendous potential, but right now there are 7 significant limitations that are holding it back:
Not enough overall investments to diversify Not enough core investments to diversify
Too high minimums
Limited to accredited investors only
Extreme investment fragmentation
Onerous education requirements
Difficult due diligence requirements
There are ways to mitigate several of these issues, and if you're interested in learning more, I encourage you to look up my detailed article on the subject, from my site. (Bigger Pockets does not allow linking to sites that you are affiliated with, so I cannot give you a link).
Thanks for the warm welcome @Mark Nolan. I've already been able to connect to a lot of smart people on the platform and am looking forward to being a bigger part of it going forward.