Will crowdfunding tip the scale of the real estate industry? Okay, it might be a little bit harsh but is crowdfunding a threat or not to the industry? According to Forbes, as far as the industry is concerned, crowd funding is just an evolution of an old way of buying properties in the real estate industry. To backtrack, before the internet age dominated the world, crowdfunding or partnership was in place. The only difference today is the internet, but everything remains the same.
For those who are unfamiliar with how it works, it is simply getting people to chip in to buy a property and divide the profit according to their share. This has been in the industry and one of the most recognized crowd funded real estate agency is the Realty Mogul. Realty Mogul was established in 2012 by then 25- year-old vice president at a Union Bank in Los Angeles, Jilliene Helman. Helman then recruited Justin Hughes, a consultant for businesses building communities. The company started with a $110,000 capital and fast forward now, Helman still sits as the company's CEO and is now worth $10,000,000 in venture capital with more than 17,000 accredited investor members.
Another company that is clawing its way to the upper echelon of the crowdfunding in the industry is Fundrise. Fundrise on the other hand has more than 25,000 accredited investors. The company was built by brothers Daniel and Benjamin Miller. The Millers are no stranger to the real estate industry as they were brought up by their real estate developer father, Herbert S. Miller.
Peerrealty acknowledges the fact that since crowdfunding is gaining popularity in the industry, it is inevitable along the way that bigger investors will eventually tap into it and the only advantage that the first comers had was they were the first of the first and they have built deeper connections in the small world crowdfunding.
Helman also said that the reason why she succeeded in this venture is that she saw the potential in the niche; she just filled the void and continued to expand.
