Crowd Funding

6 Replies

Hello BP community,

I wanted to know what you guys think about crowd funding and whether you would consider it for your next investment endeavor. I'm sure some of you have financed using crowd funding - would you recommend it for new investors with little to no money down?

The reason I'm asking is that the idea is relatively new, and crowd funding firms are still in their infancy. Thus the lack of reviews and experiences posted online. I am seriously considering trying it out and buying a multi-family house in Los Angeles, especially that I'd practically have to put no money (as far as I understand at least) - I'd appreciate your input!

Thanks in advance

It is not true that you would have to put little money down Crowd funding sites want at least a 65%ltv and a track history of the borrower.Prepare to pay up to 12%interest and other fees. There have thousands of deals that have been done already and crowd funding is moving into the late 2 Nd inning.There are plenty of reviews on BP but not too many from borrowers.

As Steven said you'll need plenty of money to invest and a verifiable track record to even be considered by one of the crowdfunding platforms. They want you to invest into the project at least 10% and sometimes up to 35% of the cost, depending on the project and they won't lend to or buy an equity stake in a project being operated by a beginner investor even if you have the money. Then you have to qualify, that is the project has to meet their standards and your credit has to be on point. 

I had plenty of projects under my belt, good credit score, and the money to complete the entire project on my own yet I still got turned down by more than one platform because my project was too risky. 

If you don't have the money to put down or experience you won't get funded by any of the platforms. Also keep in mind that this is short term funding and they expect you to pay back the principal typically within 12-18 months, and pay >12% interest only payments until you do.

Thank you very much for your replies

@Jacob Baboon there are other alternatives out there rathe than looking for crowdfunding. 

They're a viable option! However you'll need a significant amount of money invested to make a reasonable return.

You're better off leveraging your capital through real estate.

oops wrong post, thanks for the advice in this one though!

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