CCIM Feature

Crowdfunding Conditions

With nearly 2,800 crowdfunding and crowdsourcing platforms worldwide, according to the latest figures from crowdsourcing.org, it’s no surprise the real estate industry has seen a gigantic wave of investors dive into this fast-growing market. “Crowdfunding sites are allowing investors to see more real estate opportunities than ever before,” says Michael Weil, president of New York-based RCS Capital, which will launch its new crowdfunding platform, We Are Crowdfunding, this fall. “Some of them are large-scale development opportunities, while others are local rehabilitation or similar projects.”

Yet these investments must be approached with caution and investment expertise, Weil points out. “The increased number and visibility of real estate investment options means that investors coming to crowdfunding sites are seeing more opportunities that might not be of appropriate investment quality or that might bring with them fraud, over-concentration, or other unseen risks.”

The various crowdfunding models in the marketplace also require careful navigation.“U.S. investors who are offered an interest in a fund or company that is buying real estate must meet the SEC’s definition of an accredited investor, which requires individuals to have a net worth of at least $1 million (excluding their residence) or current income exceeding $200,000 per year,” Weil says. “On the other hand, there are no specific investor qualifications for direct investment.”

As the crowdfunding industry matures and the SEC continues to review the burgeoning sector, experts predict more growth and interest. “By bringing information, tools, and opportunities to invest in real estate of all types to a broader cross section of investors, crowdfunding should generate healthy growth in real estate investing generally both in a short-term as well as a long-term sense,” Weil concludes.

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