Latest on crowdfunding as non-accredited investor?

9 Replies

I am very interested in getting in to the crowdfunding space, in particular equity deals, however it seems like most of the main portals are still only working with accredited investors.  Anybody hear anything about changes that might be on the horizon for us non-accredited investors?

I'm not interested in REITs, debt, or boring funds, I want to build capital on some of these great/risky equity deals, but for now it seems like everywhere I go I'm not allowed to swim in the big kid pool.  I understand why, it's just frustrating that only the rich get to deploy their capital at 20%+ passive returns.  I do own residental real estate, just looking to jump to the next level (while remaining passive).

So I'm curious if anybody has heard anything about any movement on the major portals for non-accredited investors.

I've gotta say it's pretty frustrating the govt. regs protect us against ourselves.  

Why not just source a syndication?  If you can find one that operates under Reg D 506 (b), the sponsors can accept up to 35 sophisticated / non accredited investors.  Feel free to send me a PM, It sounds to me based on your experience, you'd qualify as a sophisticated investor for my company.

There are three national  portals that have offerings for nonaccredited investors: Rich Uncles, Fundrise and RealtyMogul. 

I did an in-depth 2 part article comparing the three on numerous differences.  Since BP doesn't allow me to post a link to my own site, if you are interested you can find it  under news/interviews and " non-accredited investor options".  If you have any questions, please let me know. 

I will say that some sponsors paint very rosy pro-forma and in realty it's only in the mid-teens for the IRR I'm seeing.

The ones that I see that are 20%+ IRR are more risky, like ground up or going after distress plays and these guys usually have significant buy-in $50k-$100k and longer holds 7-10yrs.

There was an article I found before that talked about Rev A+ offerings (open to non-accredited) creeping up on some platforms:

Good luck!

On the syndications that I put together, projected IRRs can be in the 20% + range for the long-term holds.  These are mostly in the area of senior care facility development.  Senior care as a sector simply outperforms other sectors of real estate and the higher returns are more of an indicator that the investor chose the right sector to invest in rather than a higher risk assumed.  A lot of these deals get picked up by REITs -so private investors do have a harder time entering these deals because of the size of the investment required and sometimes it's hard to put together a large enough syndication in the time required nimbly act on a project.  That's honestly why I joined BP- to see if I can garner interest from private investors vs handing the big rewards to the big guys.  But in responding to Lawrence Hsieh, not all higher returns are higher risk.

Thanks all.  I guess I did not realize I could participate directly with a sponsor as a non-accredited investor, sort of tricky because they can't advertise to me, however I'm not aware of a place where I can go and seek them out (except maybe here).

@Ian Ippolito yes I am aware of those platforms' offerings, however if you read my post I'm not interested their boring low-yielding funds.  I have read over your site, very nice, thank you for providing that information.

@Lawrence Hsieh I'm sure the projected returns are a little inflated, but many would usually beat most everything else... And thanks for the link, I did stumble across that at some point in my research, but still seems like most of the platforms aren't ready to accept small-fish money yet.

@Kevin Trumbull , Sorry I misunderstood you. Yes I did see that you were not looking for a low yield fund. Just so you know most people would not consider a 9% passive investment yield in today's environment to be a "boring low-yield" fund, but rather a moderate/fair yield for a passive investment (especially when compared to alternative assets). The more you reach for yield, the riskier your investment gets: there is no free lunch. Good luck with your investments.

@Kevin Trumbull

The sites can advertise to you, but they can't advertise a specific offering.  There is nothing wrong with them advertising to let you know what business they're in and using NALs the same way that the platforms do it.  

The problem is that most sponsors aren't sophisticated enough to set up all this infrastructure to bypass the intermediaries and you as an investor have a hard time locating them.  The industry and technology will solve this problem in the long run.  Technology and innovation bypass intermediaries over time; it's just what happens.  The way the industry exists today WILL NOT be the way it exists in 10 years.  

Further, exemptions like Reg. A+ will be adopted by more in the industry over time and legal costs associated with forming offerings under this regime and/or under Title III will come down over time.  A lot of this stuff is brand new and people are learning how to use these tools.  The industry has only functionally been around since about 2014; or about 3 years now.  It takes a few years just to build suitable software and legal for most people to perform these services independently.  Expect for non-accredited investors to have more options over the next few years and for things to continue to improve over time.  

As a syndicator I don't like the red tape with non-accredited investors. There are a lot of accredited investors out there to fund a syndicators deal so why deal with the extra headache when you do not have to?

The unaccredited investors are seen as less sophisticated than accredited.

50,000 to 100,000 per investor to invest is SMALL. Some investors put in 1,2 million etc. in a deal.


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