Commercial Investment Real Estate September/October 2018 | Page 18

INVESTMENT
A N A LYSIS
Crowdfunding Capital
Crowdfunding offers a wealth of opportunities for
CRE owners and investors.
hile real estate is one of the most traditional and
palpable forms of investing, new digital platforms
are transforming how some owners and investors
are sourcing capital for their assets and funds.
Despite many still viewing crowdfunding in real estate as the
newest fad, a report from the Cambridge Centre of Alternative
Finance shows that real estate crowdfunding across the Americas
grew by 250 percent in 2015 to a volume of $483.77 million —
up from $138.15 million the previous year — with similar yearly
rates of growth over a three-year period.
Title III of the Jumpstart Our Business Startups Act, or JOBS
Act, passed in 2015, opened up crowdfunding to an even wider
range of investors. In the time since, increasing numbers of own-
ers and investment firms have begun to view and utilize this as a
valid — and deeply valuable — means of sourcing capital.
W
Capitalizing on Crowdfunding
Below are the top three ways that real estate owners and inves-
tors can take advantage of crowdfunding and current trends in
the sector.
1. Target investors across a wider range. Crowdfunding in
commercial real estate has opened up a market that traditionally
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September | October 2018
has had high barriers of entry to a wider constituency with regard to
minimum investment required, geography, and accreditation status.
Rather than requiring minimum equity commitments upward
of six figures, investors can buy in with as little as $1,000 in
some cases.
Some platforms provide the opportunity for unaccredited inves-
tors to build and diversify their portfolios, or create a streamlined
process for foreign investors to have a stake in U.S. real estate with
fewer hoops to jump through.
Further, as millennials and potential investors of all ages move
toward taking advantage of a more mobile, instant, and on-
demand lifestyle, online crowdfunding is a way to cast a wider
net and attract those who might not have the time or diligence
for traditional real estate investing.
2. Utilize access to multiple platforms. Several investment
models are available across dozens of platforms within the com-
mercial real estate crowdfunding space.
When considering online crowdfunding to supplement equity
or even establish an electronic real estate investment trust or fund,
it is important to understand that not all of these platforms are
created equal; in fact, due to their differences, they can be lever-
aged alongside each other.
COMMERCIAL INVESTMENT REAL ESTATE
by Max Sharkansky