Anyone interested in real estate development or investment should get up to speed on a new addition that has hit the industry – crowdfunding. Crowdfunding for real estate offers both an alternative source of financing for real estate developers whilst also offering investors opportunities they previously would not have access too.
As a developer who has executed deals in difficult market conditions (GFC) and in difficult markets (China and Sri Lanka to name a few), I am acutely aware of the challenges faced by developers looking to grow their projects. Some challenges that developers face when funding their deals include, but are not limited to:
- Large portions of the developer’s own equity often tied up in previous deals
- Developer’s investor contact base has been exhausted
- Developers are usually busy building and managing their existing projects and future timeline, leaving little time to fundraise
- Traditional bank financing is expensive or unattainable due to the conditions imposed by the bank
- Size of the deal is “too small” for large institutional investors (this might still be a 20 Mil USD deal)
- Developer is following the cycles, chasing the opportunities and moving into new markets or into new products
Working with many investors of different shapes and sizes, and as an investor myself, who has also executed real estate deals in the above conditions and markets, I have often come across similar feedback in terms of the challenges faced when trying to find a good deal to invest into. Some of the universal issues include:
- Where do you invest
- Who should you trust
- Size of investments are too big
- Don’t have the time or energy to spend travelling, researching, reporting and assessing deals
- Difficult to verify the viability of a development project without the help of professional guidance
What real estate crowdfunding does is bring both investors and developers together in a transparent way. Investors can consider different types of deal across different asset types, research and assess the developer’s plans and track record, and through the platform, monitor the reporting of each of their investments. Good platforms push developers to allow smaller size investments so there are opportunities for their members who do not have piles of cash lying around, and still giving the developers the ability to scale their investor base by tapping into an entirely new category of investors. Deals are currently small, but I believe in the not too distant future, there will be a day when you see entire skyscrapers being fully funded by the crowd. InvestaCrowd has this goal slated for 2017.
Knowledge is power, and real estate crowdfunding is giving people power. Platforms like InvestaCrowd provide the access, education and research that are key to finding good investment opportunities with successful and trustworthy developers. Gaining access to global real estate deals is key in today’s volatile investment environment as markets move, regulations change, and boarders have eroded due to the Internet of everything.
InvestaCrowd is a global real estate crowdfunding platform headquartered in Singapore, deals on InvestaCrowd are exclusively available to our members only. Their are limited investment positions in each deal, and investments are offered on a first come first serve basis. To see the latest offerings and begin investing today, login and create an investor account at www.investacrowd.com
We welcome all comments and would love to hear from you, thank you.