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Four Reasons Why Commercial Real Estate is the Perfect Crowdfunding Investment

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Great news for investors: through crowdfunding, a wider pool of participants now have the opportunity to reap the benefits of the reliable, strong returns provided by commercial real estate investment.

Here are four reasons why commercial real estate is the ideal crowdfunding investment:

1. Commercial real estate (CRE) is a proven asset class with historically strong returns. Returns on assets such as shopping centers, office building, and industrial facilities were up 11 percent in 2013, according to the NCREIF Property Index, and are expected to do as well or better this year.

2. Commercial real estate generates regular cash flow from rental income, unlike other investments that simply gain value. Plus, if it’s a smart purchase, in an area where the economy is on an upward trend, the real estate will simultaneously appreciate in value.

3. Additionally, CRE is an asset that is recognized and utilized by major institutional investment entities. While most crowdfunding platforms focus on the individual investor, a few companies have begun to partner with institutional investors to co-invest in commercial real estate, gaining the same terms enjoyed by those groups, while leveraging their size and experience. Individual investors can now invest in the same projects as major institutions.

4. Crowdfunding is one of the only investment options that gives accredited individuals access to commercial development without the threat of capital calls and without the headaches that personal ownership and management can bring.

Currently, the crowdfunding of commercial real estate and other investments is only open, for the most part, to accredited investors, individuals who have a net worth of $1 million, not including their primary residence, or those whose annual income is $200,000 and above. The loosening of those restrictions by the SEC, due to take place within the next year, will fundamentally change this.

A major pool of thousands of new investors will be able to enjoy the benefits of commercial real estate returns once enjoyed by only a small fraction of the population.


By: Dan Miller

Co-Founder | Fundrise

Follow Dan on Twitter: @dan_miller

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