Real Estate Trends | Real Estate Crowdfunding: An Easier Way to Raise Money for Companies
[{"id": "cgemjhl", "text": "So how is crowd funding real estate investment any different from a REIT?", "replies": [{"id": "cgeviz5", "text": "It's less liquid. I think this isn't a particularly good trend since people who are being marketed to probably aren't underwriting the risk of the investment correctly.", "replies": [{"id": "cgeww9f", "text": "Wouldn't you still need to comply with S.E.C. regulations to solicit investors like that? It'd be a lot more complicated than just throwing it up on kickstarter I assume...", "replies": [{"id": "cgex1ae", "text": "As far as i can tell, the only compliance is the investor must be accredited which pretty much anyone with the extra money to throw at these things are.", "replies": [{"id": "cgex4rl", "text": "REITs have a ton of regulations they must comply with, why would that not apply to crowdfunded real estate investments?", "replies": [{"id": "cgexfva", "text": "I believe it's because REITs are publicly traded. Although the crowd funded real estate is available on the internet, it's still a private investment which means they don't have to comply with the same regulations as REITs. As long as all the people putting money in earn more than like, $100,000 or whatever the criteria are to be an accredited investor, they can invest. The assumption being that if you're accredited, you're more sophisticated than Joe Schmoe buying stocks for his retirement fund. I think they just set up all the people who invest as LPs in some structure.\n\nThere also seem to be pretty screwed up incentives. How do the crowd funding aggregators make money? They curate the properties but are they being paid from the people who hold the properties once the money clears? Because the aggregators don't manage the properties, they only source them like brokers. This begs the question, who manages the property? It seems to me the people who own or solicit the investment end up managing the property which can lead to my final qualm about crowd funded real estate. It's unclear where you will end up in the capital structure of a crowd funded real estate investment. I think what is happening is the people who originally held the investment end up cashing out their equity by essentially selling the property to the crowd funders. It would be virtually impossible to line up the equity check from the get go with crowd funding, it's definitely someone writing the check as a bridge between the actual acquisition and the eventual \"permanent financing\" through these crowd sourcing platforms.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}, {"id": "cgiepbn", "text": "There is a company called Fundrise that is doing it here, and some of them are restricted to people in the area because the investors aren't accredited. I think the headline saying it's 'easier' is way off, but it does have it's advantages.", "replies": [], "depth": 4}], "depth": 3}, {"id": "cgieptk", "text": "the ones that I've seen here are limited to $2,500 per person, so hopefully that isn't your life savings.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]