by Michael Hull
Real estate crowdfunding is the practice of raising funds from two or more people over the internet towards a common project. Through crowdfunding, people can raise funds to revamp a project, expand a local business or start a new development in their neighbourhood.
The idea of investing in real estate through crowdfunding is rapidly becoming popular across the globe. Through real estate crowdfunding, everyone is allowed to invest in local projects, something that has been unworkable for the past 80 years. Traditionally, only wealthy and rich individuals and institutions had a chance to invest in real estate properties.
Crowdfunding for real estate is the most popular type of crowdfunding because people find it easier to access (and they enjoy greater returns which are not offered by other financial institutions) than traditional methods of financing. Real estate investing is more transparent, directly involving and rewarding; that is why real estate crowdfunding is more common among people compared with other types of investments.
Through realty crowdfunding, many local projects have taken off the ground. People are able to pool resources and invest in a common project that they believe will be successful and generate profit.
The internet has been one of the tools that have greatly facilitated real estate crowdfunding. With more people being accessible to the internet, the gap between investors and developers has been narrowed. Investors are now able to access relevant information about different ventures and invest in the ones they are interested in, with just a click of a button.
Several states have proposed crowdfunding exemptions that permit non-accredited investors to participate in real estate investing. Several states including Georgia, Kansas, Michigan, Wisconsin, Washington, Alabama, Indiana and Maine have implemented intrastate rules that have legalized crowdfunding. Many other states are considering the same move.
Crowdfunding has facilitated the creation of wealth in several local communities in the United States, and therefore local residents are directly involved in these projects. The regulations proposed in the JOBS Act were to be enacted by January 2013 but to date only crowdfunding rules for accredited investors have been implemented. Right now, the SEC is pushing for these regulations to be endorsed. Several states are formulating intrastate laws to allow non-accredited investors to participate in real estate investing as the legislation process continues.
Crowdfunding perfectly fits real estate industry due to the easier availability of information on investment opportunities. Investors can evaluate investment opportunities, check the status of projects, look at zoning issues, and even title and tax records. All these make real estate investments more involving and transparent.
As the idea of real estate crowdfunding continues to be improved and implemented in various states, many platforms are being developed to support this inventiveness. Investors are allowed to sign up at any platform and participate in the available investment opportunities.
Michael G. Hull, Editor at Times Realty News
Michael G. Hull is Editor at Times Realty News, a media stream for the emerging real estate crowdfunding and capital formation industry. He received his Master of Science in Community Psychology in 2001 and has worked in the field for 20+ years. His experience brings a unique perspective to Times Realty News. His experience as a consultant, community relations expert gives Michael a diverse yet an acute psychological understanding of the financial landscape of capital formation for real estate and other industries. Michael co-produced Carnegie Hall concerts for Best Buddies charity in NYC and has raised money for inner city youth-focused charitable organizations for 20 years.
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