Crowdfunding has become all the rage in recent years to help people launch a variety of projects, nonprofits, or even companies. It looks like crowd funding usa could even be reaching into the real estate market, though, which has some important implications for investors.
One such example of this is SaundersDailey, which provides opportunities for properties all over the country. The company is a co-invested fund that relies primarily on matching community investors with opportunities in their local market. Although crowdfunding on a national basis is problematic because of the underwriting risks, this local approach removes some of those concerns.
Crowdfunding has to do with meeting
Part of the rise in crowdfunding has to do with meeting investors interest levels. Many investors are hoping to uplevel their portfolios. This might mean going from a building with a few dozen units to a few hundred, and this often comes in the form of a 1031 exchange. As a result, these investors are looking for sellers with an open timetable.
Some have suggested that even though crowdfunding is somewhat new to the real estate market that the potential for oversaturation is strong. According to some experts, there are as many as 250 crowdfunding platforms that dabble in the real estate market currently, but there is still plenty of room to grow.
Crowdfunding platforms
It’s likely that as crowdfunding platforms grow and evolve, they will focus on different needs for the real estate market. This could be types of investors, types of returns, geographic locations, or even types of real estate. As more platforms enter the market and strive to be competitive in the landscape, it is expected that they may try to specialize and succeed in serving one particular segment of the market.
The average crowdfunding commercial real estate investor is someone earning between $200,000 and $500,000 a year. Even though this would be considered a solid income by most, it’s just the right level of income for investors not to want to risk too much of their own money. This is why crowdfunding appeals to this particular subset of investors, so long as they can find the right crowdfunding platform for their needs.
Many people in this subset of investors feel like all the high-end investment opportunities go to those earning more than $500,000 a year, thus shutting out the investors making less than that from getting involved in the market. crowdfunding for real estate developers, however, has the potential to change all of that and make real estate investment much more accessible.
4 Crowdfunding Real Estate Trends For 2016
- It is a recent concept, but it is beginning to mature. As a result, investors can expect to see the consolidation of crowdfunding platforms as bigger and better competitors begin to absorb their less successful counterparts. While this will result in some chaos and confusion in the short rate, said individuals can also expect better security and better services because more mature crowdfunding platforms mean more resources as well as more expertise and experience.
- As this particular field of crowdfunding matures, it is probable that debt-based investments will become more and more popular than equity-based investments. In main, this is because debt-based investment provide better rates of return, albeit at higher risks. However, it also helps that the maturation of crowdfunding platforms will boost investors’ confidence in potential investments. It is possible that some crowdfunding platforms will even begin specializing in debt-based investments as opposed to equity-based investments.
- At the same time, investors can expect to see a crowdfunding for real estate developers bigger and bigger range of investments being made available through crowdfunding platforms for real estate. After all, as this particular field of crowdfunding matures, it can expect to see more and more investors looking in, driven by their sense of curiosity if nothing else. In response, it is likely that developers will begin offering more and more diverse investments as a way of attracting more and more diverse investors, thus increasing their potential funding.
- The Internet has eroded geographical boundaries of all sorts, so it should come as no surprise to learn that it is expected to erode geographical boundaries when it comes to crowdfunding for real estate as well. Expect more and more crowdfunding platforms to support investing in other countries, thus opening up more investing possibilities for investors as well as more funding for developers. Better still, this has the potential to improve the long-term health of the field since afflictions in a single regional market will have a much harder time shaking confidence in the whole.
Further Considerations
Of course, these are but some of the trends expected for 2016. To learn more, interested individuals should continue keeping an eye on real estate news as well as other resources to make sure that they keep up-to-date on all of the latest happenings.
