Real Estate Investor Magazine South Africa October 2016 | Page 18

TRENDING Crowdfunding The Ins and Outs of Investment Sourcing BY DREW HOOK R eal Estate Crowdfunding is an online funding platform that enables funders to find investment opportunities for real estate projects and developments. The platform serves as a venue for property investees and developers to present their projects and to secure an alternative source of finance, helping them find like-minded people who are willing to invest. What makes Real Estate Crowdfunding so unique is that it presents investors with opportunities and services that they would not have come across using traditional means. Furthermore, it also allows investees to reach a wider audience. This audience in turn creates opportunities for smaller investors to enter the development market without putting up more capital than they are comfortable with. Traditionally, commercial real estate has been the investing ground of the wealthy and high net-worth individuals. High prices, stringent lending criteria, and specialized knowledge were often barriers to enter the marketplace for smaller investors, limiting their ability to participate in this most lucrative part of the real estate investing. Real Estate Crowdfunding opens the door to smaller funders and investors to participate in these gainful investments. While you cannot finance your property or project through Real Estate Crowdfunding Dot CoZa at the moment as the law prohibits that way of funding. If you have a property opportunity, a project or a development – you can raise equity funding by getting partners with money on board. If you have secured the property below the value and there is equity more than the property’s value – you might be able to raise equity funding needed and stay in the deal for the extra equity available. Investee registers on the website • Investee registers and lists his/her investment/ development/project on the platform with 16 OCTOBER 2016 SA Real Estate Investor • brief project/property description • An email is sent out with required documentation • Investee pays R5000.00 admin fee and supplies all the documents • Documents are thoroughly checked by a real estate professional – property • investment/development/project goes live on the website • If documentation is not satisfactory – more documents are requested Funders register on the website • Funder goes through the property investment opportunities available • Registers his/her interest in opportunities that look lucrative • Detailed information regarding the opportunity is emailed to the funder •Funder scrutinizes the documentation from various opportunities and chooses the ones of interest Funder logs into the website and pledges investments amount Reference and banking details are emailed to the funder If funding is successful: • Funder is notified, a (SPV) PTY registered for this purpose and meeting of shareholders • arranged to take it further • Lawyers proceed with the transfer • If funding is not successful – all amounts paid are returned to funders • Investees are notified accordingly and then can choose to list the property on: • Maximum One Property Group to broker the deal • JB Auctioneers for a quick sale RESOURCES realestatecrowdfunding.co.za www.reimag.co.za