Real Estate Crowdfunding - Experience & Questions

11 Replies

Hi all - I work for Groundfloor. We are one of the first crowdfunding real estate platforms for non-accredited investors as well as accredited investors. We are planning to expand outside of our pilot market in Atlanta and I'd love to hear people's thoughts, experiences and questions surrounding this new market phenomenon. Not trying to push Groundfloor (although I am biased), simply interested in establishing a dialogue on this topic as it relates to the Seattle market. Thanks!

Hi Ben,  The biggest problems I have with most marketplaces these days are: 

1)  not enough investments to diversify into 100+ properties ( forcing investors to go to a lot of different marketplaces )

2) too few core/core plus, cash flow investments to buy and hold.

3) minimums too high to allow  most investors to safely diversify into 100+ investments 

4) not enough recession resistant categories like  self storage, mobile home parks, etc.

 Good luck with expanding your marketplace, and hopefully you address some of these issues. 

Awesome points, Ian. I agree. We're particularly focused on addressing (1) and (3) that you mentioned. Our minimum investment is $10 for precisely the reason that you mentioned---diversification. That said, we do need to increase our loan offerings accordingly, but once we expand outside GA, that will hopefully change. Lastly, we'd love to offer more types of properties, but we intend to remain hyper-focused in order to actually do something well. Arguably, lenders investing in various parts of the country can diversify by investing in other parts of the country, region or state. Thanks again for your thoughts, I love it.

Very interesting topic. This really is the wave of the future. Crowdfunding is the way around a lot of the red tape. For now...

Great topic! Interested to see what people have to say.

Brandon, I'd love to hear how you or other real estate agents are thinking about using these platforms. If you have any thoughts, please share!

@Ben Armstrong

My personal experience is that most crowdfubdjbg platforms are good for a $2M raise max.  Also, most are not diversified in terms of accredited investors and sponsors.  I spoke with execs at one recently which predominantly had flipper funds listed.  They may generate higher fees as the terms are short on these funds, but they do so at the expense of diversifying into other investment models that will generate better returns on other market cycles (flipping model is challenging in declining market).

@Ben Armstrong what states are you doing non accredited? Is it interstate? Gracias!

@Jon S. (hope that works to tag you), those are excellent points. What other investment models / property types would you look for in a declining market?

@Matt R. We are currently doing intrastate crowdfunding in GA

Son of a monkey! I'll eventually get the tagging thing down. Sorry

Ben, I've seen your company's pitchdeck and I'm very impressed with the way that you guys have prudently tested out your platform in GA before expanding into other markets, but that poses one key problem with platforms such as yours: How do you perform reasonable due diligence on a market where you have no presence? It's one thing to review a commercial deal from a remote location (a grocery store is a grocery store, only difference is the demographics) but a fix and flip residential property is an entirely different matter.  One block over can make a huge difference.

Ben, 

Thanks for the info you have a provided. I have an account and I have been on the fence about investing. Do you guys have statistics for default rates for the overall platform or by state? How does the process work in a default? What is the recovery process in the event a borrower defaults? who leads recovery in a crowdsourced loan?

Thanks!

Hoping to invest soon 

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