Posted almost 7 years ago

Crowdfunding 101: Just the Facts

Crowdfunding for real estate investors

Mark Roderick is one of the leading Crowdfunding and Fintech lawyers in the United States. Mark speaks across the country representing cross industry participants, expanding on his in-depth knowledge of capital-raising and securities law. Mark represents many portals and other players in the Crowdfunding field. He writes a widely read blog, crowdfundattny.com, which provides readers with a wealth of legal and practical information for portals, issuers and investors.

Mark Roderick joins John Carney today in The Real Estate Locker Room to discuss Crowdfunding and how to arm you with the knowledge to close the deal.

Tune into our conversation here iTunes - Stitcher- Google Play

Five Key Points:

Crowdfunding is using the Internet to raise capital and usually only happens when the market is up.
There are 3 flavors of Crowdfunding (Titles refer to different sections) and for the 1sttime in US history, you may advertise all Titles.
1. Title 2 – Very popular and an active option. Only one rule: only accredited investors can participate. This is based on the foundational principles in American Security laws from the 1930s.
2. Title 3 – Brand new to the US security laws. Non-accredited investors can participate. However, it does not require FCC approval unlike Title 4. This is an experiment to test if the accredited investors will “fleece” non-accredited investors. Title 3 has many regulations, limits the amount of money you can raise, how much each person can invest (very small amount), among other things.
3. Title 4- Similar to public offer. Non-accredited can participate but will have to jump through hoops and regulations. Similar to miniature public offering.
The easiest way to approach the Crowdfunding market to already have success and have completed many deals through private clients. Then you can go to the top real estate Crowdfunding sites who already have investors registered.
How do you get a standard rate of return and how do you safeguard it?
1. Invest only at trusted sites.
2. Invest in someone who is smarter than you. Use a real estate professional who has vetted the site you want to use and the deal.
3. Invest in a fund instead of a single deal.
4. Invest in a reputable site and get some diversification.
5. Start with accountant and find a great lawyer.
Rate of return and investor offering or receiving: depends on the asset class. Projected returns are going down due to a mature market.

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