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Crowdfunding Comes to Real Estate

12/23/2014

We are loving crowdfunding. We've covered it extensively on our blog, and have contributors writing about it from sites like Realty Mogul and Fundrise. Learn more about the concept in this post.

Crowdfunding has changed the way many different types of businesses and projects are formed, financed, and run.  From film production, to small business startups, to non-profit causes, crowdfunding has become a go to method to raise capital in a short amount of time without having to change or compromise your initial vision.

For the last several years now, many have thought real estate to be the perfect business to utilize the crowdfunding model with.  However, federal regulations have limited the size and scope of crowdfunding for real estate and who can invest in them.  But more and more crowdfunding for real estate sites have begun to pop up, and some have become very successful.  One such crowdfunding platform is ifunding.  ifunding and its real estate partner, The Bruckal Group announced that they have raised more than $1million in the last 14 days for its latest residential project.  Forty-five investors put in money to help The Bruckal Group purchase a condominium and townhouse community in Aurora, Co.  This money, along with private equity contributions and loans will help the Bruckal Group expand its real estate holdings and invest in one of the fastest growing suburbs west of the Mississippi River. The business model will return capital and profits to the investors rapidly as well as more potential profit from additional development on the property. 

Crowdfunding has enabled investors to invest with an experienced developer, in an individual project that they desire, and at a price that is affordable to people who are well qualified but not able to solely finance this type of project.  For the developers, they retain creative control of the project, yet gain good investment dollars to compliment the money already invested.  Thus far, crowdfunding has proven to be very successful for both investors and real estate firms, but time will tell if crowdfunding for real estate will continue to be successful in the future. 

 

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