I’m sure most of you have by now heard of crowdfunding sites such as Kickstarter etc. well the idea has permeated to the real estate industry and I can’t be happier. I really like the idea of being part of a group that finances a property and then shares in the profits when it’s sold.
Once I started investigating the various sites that deal in crowdfunding real estate I also realised that they are not all the same. I decided to write a few blogs to cover the various aspects and hope they are interesting and inspiring for you.
Institutional crowdfunding is the latest form of crowdfunding
Instead of offering small projects to the crowd for funding, institutional crowdfunding offers bigger projects to target institutional investors or high net worth individuals.
When established organizations seek funding for much larger projects than normal crowdfunding could fulfil in a reasonable time they use what is dubbed Institutional crowdfunding which involves big businesses or institutional and accredited investors from which to source the necessary funds.
Fundrise, is one such real estate crowdfunding platform which uses institutional capital. It has now raised a total of $38 million from a group of high net worth investors.
Huffington Post reported: It is estimated that funds raised through real estate crowdfunding currently accounts for $135 million of the total $13 trillion real estate market. Thus, the infusion of institutional capital into the crowdfunding market place will only make it more attractive and more credible for the institutional investors and other high net worth investors who are watching from the side lines.
As a small time crowd-investor should I now be worried that these big guns will eat up all the best investment real estate? I personally with my tiny expertise, think not as they are looking for the large properties which I have no real interest in and they have no real interest in the smaller investments so I think and certainly hope that this is the case.
So happy crowd-investing till the next time