RE syndication vs. crowdfunding?

5 Replies

I'm new to the RE world and BP. 

I am hoping someone someone could clarify the difference/if any between a RE syndicate and crowdfunding. Also any resources pertaining to RE crowdfunding would be appreciated! 

Hey @Sam Chen

I will first say I'm not an expert on this subject but I do have investments in both buckets.  In a nutshell, crowdfunding is a way to get into syndications.  It allows masses to quickly join a syndication usually via a nice website.  They may (or may not) have different SEC guidelines to follow as well depending on the investment and the portfolio management.  

Many crowdfunding sites require you to be accredit, although that is become less of an issue lately it seems like with many of those platforms opening up funds for non-accredited investors as well.   

I personally use RealtyMogul which has a very nice website and sign up process, but the returns are nothing to write home about.  But it's safe and steady.  My syndications have much higher return potential but are also slightly riskier.  Lots of info to Google out there on the subject, so I would just start searching and reading as much as you can. 

Cheers!

Originally posted by @Sam Chen :

I'm new to the RE world and BP. 

I am hoping someone someone could clarify the difference/if any between a RE syndicate and crowdfunding. Also any resources pertaining to RE crowdfunding would be appreciated! 

Sam,

I have a significant portfolio in real estate that includes old-school syndications as well as the newer crowdfunding deals. They are essentially the same: the main difference is that crowdfunding allows the sponsor to publicize their deals on the Internet where before we were limited to family, friends and word-of-mouth referrals.

There are literally hundreds of platforms and you can choose from hundreds or thousands of deals each month. 

I would not recommend jumping into any particular deal or platform at the beginning. If you do that will most likely end up with a portfolio that is out of balance with your overall objectives and goals. 

Instead, I would recommend taking a step back and figuring out how much of your portfolio invested in real estate. Then, educate yourself on the different choices (equity versus debt, residential versus commercial, core versus core plus versus value-added versus opportunistic, retail versus office versus hotels versus self storage etc.). Once you understand the risk/reward on each, can figure out how you want to divvy up your portfolio. Then, and only then, would I start looking at platforms and deals that match goals.

If you want more info then PM me. Good luck.

Like everything its about educating yourself. @Ian Ippolito laid out the best way to tackle that. Once you align with your goals, then you can make a clear and concise decision on which investments to target. Don't rule out both options and diversifying if you find opportunities that meet your goals. That is of course you first learn which platform (crowd) is right for you and which sponsor (syndications) you prefer to invest with.