Crowdfunding: Picking Up Steam in the US Real Estate Market

US investors looking to benefit from crowdfunding and real estate may benefit from a tipping point. It is clear that this industry is very quickly attracting attention for raising capital from small businesses over the internet.

The amount of money raised to the speed at which these accomplishments happen and the size of deals has increased steadily over the last several years showing that crowdfunding for real estate is gaining more attraction. Industry executives believe that lifting a regulatory band blocking typical investors from crowdfunding could help to increase the amount of capital raised for company and the volume of deals being completed. This would also allow investors to tap into annual returns of between 7% and 12%.

Currently, crowdfunding allows the financing of a venture or project by raising small amounts of money from many people and is usually done over the internet. Despite the rapid growth in crowdfunding for real estate, this is still a small speck in the eco system of investing.

A post from the US Office of Information and Regulatory Affairs, regarding the implementation of Title 3 of the Jumpstart our Business Startups Act could make crowdfunding open to small investors. This was tentatively expected earlier this month.

Since the Jobs Act two years ago put forth an exemption on the previous ban of public solicitation of private capital investments, real estate has been a standout in the crowdfunding arena. Over the 2-year period since then that concluded in September of 2015, the total amount of capital raised for real estate development and investment in the US through crowdfunding was over $208,000,000. This represents nearly one-quarter of the $870,000,000 committed between September 2013 and the present. The market may even be bigger than this though, which is why there’s a race between online market places to vet the companies looking for capital in order to reduce investor risk.

Some companies conducting crowdfunding in the real estate market get upwards of 1,000 applications per month but they can only use 5% or so on their actual platforms.

The real estate crowdfunding industry could experience annual growth of 25% or more. Although most people still don’t know what crowdfunding is, the potential is definitely there. Are you thinking about investing in South Florida’s real estate market? There’s never been a better time than now! Contact a real estate expert to learn more about this exciting opportunity to own luxury real estate in Jacksonville.