Crowd Funding in Real Estate Finance a Growing Trend

Crowdfunding of real estate is an area of microlending that is growing quickly. According to Christian Faes, founder of LendInvest, everyone is jumping on the crowdfunding “bandwagon” these days. There are two predominant microlending models for financing real estate: Peer to Peer lending and Crowdfunding.

Peer to peer lending sites, or P2P sites, use a model whereby investors lend on a diversified portfolio of properties. Alternatively, crowdfunding sites pair investors up with individual borrowers to take positions on a particular properties. Because of their speed of underwriting and the fast fundings of their loans, both of these microlending models are a desirable financing alternative for real estate investors.

LendInvest, a peer to peer lending platform, makes bridge loans on real estate in the UK and is the fourth largest P2P lender in that market. “We can provide funding in two weeks, whereas standard lending takes three to six months to put in place,” said LendInvest’s founder Christian Faes. Not to mention, microlending sites like this will lend on properties in geographic areas where traditional lenders may not.

What does the future hold for P2P lending and crowdfunding for real estate? Certainly the bad and the good will be shaken out over time, and regulation is likely on the horizon. But for now, more lending is certainly a good thing for borrowers seeking bridge loans on real estate.

(Source: FT.com: http://www.ft.com/intl/cms/s/0/7a602734-390a-11e4-9cce-00144feabdc0.html?siteedition=intl#axzz3E3dUkOpN)

Posted by Corey Curwick Dutton