Eros Adragna takes a look at crowdfunding platforms in real estate and the ways that investors can take advantage of this new trend.

1. Crowdfunding
in Commercial
Real Estate
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E R O S A D R A G N A

2. Popular among artists,
musicians, and... construction
professionals?
Crowdfunding:

3. Federal regulations can limit the amount of capital
that commercial developers receive.
There is, however, still a high demand for commercial
development projects, which has caused many firms to
consider crowdfunding an alternative method to
acquire the necessary funding.

4. The JOBS Act:
Required the SEC to write rules regarding crowdfunding
and other capital formation for startups
Opened up crowdfunding for anyone over the age of 17
Required use of an intermediary to handle transactions
Sets a limit of $1 million per year for what companies can
raise from non-accredited investors

5. At the moment, they mostly provide
supplementary capital for developers,
but if intermediary crowdfunding
portals are successful in the near
future, it could mean a large scale
alternative to traditional funding.

6. Impact on Development
In 2015 alone, peer-to-peer investment went up by 300%, with $468
million invested in the market. This is still a very small portion of the
market, but the growth attests to the interest that crowdfunding
has generated in recent years.
Additionally, the often low investments common in crowdfunding
ease some of the burden on investors, allowing those with somewhat
limited funds to still contribute.

7. Equity gives the investor shares of
renter income. It can potentially be
more profitable, and confers
benefits on tax returns, but is riskier.
Investment Options
Debt is paid later with interest, and
is considered to be more predictable
and reliable, but caps returns.

8. The Future of Crowdfunding
in Development
In the future, we’ll likely see crowdfunding provide further
opportunities for both smaller real estate companies and
smaller investors. It may even eventually become
competitive with larger financial institutions.
Even now, it has helped remove some of the barriers to
entry for the industry.

9. Thank You
F O R Y O U R T I M E !
V I S I T E R O S A D R A G N A . C O M F O R T H E F U L L A R T I C L E