Nowadays, people are turning to crowdfunding for their projects that can range from simple to complex.
It may be a challenging move to introduce this system into the real estate industry, but recently more people are looking into crowdfunding websites such as iFunding and Realty Mogul. In its own essence, the process of crowdfunding makes use of networks of family, friends and colleagues on social networking sites such as Facebook, Twitter and LinkedIn to promote a new business and attract new investors.
According to the Commercial Real Estate Development Association in a recent statement, "Crowdfunding for real estate is not an entirely new phenomenon. Numerous players have entered the field. Although each of these platforms has its own niche and strategy, with different levels of minimum investment, all are geared toward accredited investors who meet specific requirements for net worth and/or annual income. By contrast, crowdfunding under the JOBS Act will open the field to many smaller investors."
With the dynamic 17,000 institutional investors on Realty Mogul, investments rose to more than $80 million in over 250 estates. On the other hand, Realty Mogul's competitor, iFunding has raised almost $30 million for 27 real estate projects from Brooklyn, New York, to Austin, Texas, according to the founder.
While crowdfunding is still at its initial stage, online investing has already enticed the attention of investors because they get access to the real estate market with less money, work directly with developers and choose from vast options of projects to fund.
It is imperative that crowdfunding will open more opportunities for old investors and increase entrepreneurship for newcomers by expanding the industry funding beyond the traditional circle of owners and capitalists. After all, flashback to 2008 global financial crisis, more people doubt the steadiness of the traditional institutions.
Although a new procedure on how to book investments, crowdfunding offers a lot of opportunities for small and big players - from investors to developers and even home-owners.
