Real estate

Communities like yours are using Crowdfunding to take matters into their own hands

David Drake - CEO - LDJ Capital - Credit Linkedin.com

David Drake – CEO – LDJ Capital – Credit Linkedin.com

While Crowdfunding gets most of its publicity due to massive campaigns for sexy devices on Kickstarter our US Crowdfunding expert David Drake says that increasingly companies like Fundrise are running projects that use Crowdfunding to fund real estate, in particular providing investors access to wholesale development deals and giving members of the community the ability to fund  local community real estate projects.

ED: Funrise recently announced they have raised ~$30 million infunding from Chinese Social Networking company RenRen

Crowdfunding has now grown from a niche to a legitimate platform for funding projects of all kinds by raising money from the public at large. Nowhere has this been more pronounced than the real estate sector where there are now a number of crowdfunding platforms offering investors the chance to participate directly in real estate projects. Traditionally, the real estate market has been the exclusive preserve of wealthy and well-connected individuals with the exception of real estate investment trusts (REITs).

Credit - Fundrise.com

Credit – Fundrise.com

Leading real estate crowdfunding platform Fundrise takes a slightly different approach from other platforms because it emphasises the social benefits that arise from investors having a say in the development of their own communities.

A case in point is the Transfer Station in Philadelphia which set out to test the market and got $1.8 million committed on a target of only $500,000 to create a community-oriented co-working, retail, education and event space.

It points out that local residents have a better appreciation of their community needs and should have a say in what happens there.

Sometimes, the dominance of large investors can lead to a disconnect between fund managers and the properties in which they invest.

The process is relatively straightforward with developers listing projects on the website and investors buying shares in these projects for sums starting as low as $100. Returns to the investors come from rental income and capital appreciation when the property is sold.

Fundrise is a pioneer in offering “Regulation A” investments, which allows any investor, and not just the wealthy individuals, to invest in real estate and receive attractive returns.

A good way of getting the flavor of how they operate is to look at the details of its recently closed third public offering, which was a property where any resident of DC, Virginia and Maryland could invest in for as little as $100 each. Fundrise ended up raising $350,000 from 378 investors, and what is interesting is that 25 percent of these investors live within a distance of 1 mile from the property.

The total project cost was $1.7 million with a projected return of 8 percent. Of the 378 investors, 51.6 percent (195) came from Washington DC of whom 16 percent were accredited investors; 24.9 percent (94) from Virginia of whom 29 percent were accredited investors; and 23.5 percent (89) from Maryland of whom 21 percent were accredited investors. Of the total investors, 51.4 percent were between the ages of 18 to 35 years, 41.1 percent between 35 years and 55 years and the remaining 7.9 percent were over 55 years old.  The average age of an investor is 37 years.

The maximum number of orders was 100 for $100 apiece, followed by 80 orders for $500 each. The average order size was $926.

The numbers and the structuring may vary from transaction to transaction but this is a good representation of the investment trend on Fundrise. All their offerings have been fully funded. There is clearly considerable demand for small value investments as well as a reasonable amount of demand from investors who live in the neighbourhood.

When you tie in the fact that investors are comfortable with real estate and that diversification can be easily achieved with multiple investments in different properties in the Fundrise portfolio, the value of crowdfunding as a legitimate and credible means of funding real estate projects is clearly established. This model is certainly one template for structuring real estate crowdfunding in the future.

 David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City-based family office, and The Soho Loft Media Group, a global financial media company with divisions in Corporate Communications, Publishing and Conferences.

GROUNDFLOOR launches peer to peer Real Estate Crowdfunding platform

By David Drake

GroundFloor, a peer-to-peer real estate lending platform, is launching a landmark securities offering that enables crowdfunding of real estate transactions. This innovative move will allow approximately 43 million Americans in six states to invest in real estate in a way that wasn’t possible until now.

Lending money to a real-estate developer used to be something reserved for banks and other accredited investors. GroundFloor is changing the rules of the game, allowing individuals to become lenders in real-estate projects. The developers of such projects will pay investors interest on the loan just as they would a bank. This new initiative provides the general public with the opportunity to diversify their investments, without being limited by their income or wealth. Also, real estate developers will have access to a new way of financing their projects and ideas, which will stimulate new real estate developments.

Federal regulations generally define an accredited investor as someone with an annual income of over $200,000 or liquid net worth of $1 million. These regulations are keeping the vast majority of Americans out of real estate investing. GroundFloor came up with an interesting and novel strategy. Instead of waiting for new crowdfunding regulations promised by the Securities and Exchange Commission (SEC) that will supposedly allow non-accredited investors to participate in real-estate crowdfunding, the company decided to work within existing state laws. So far, regulators in six states (Pennsylvania, Georgia, Arizona, Illinois, Virginia and Massachusetts) authorized the company’s initiative to solicit residents’ participation in its deals.

GroundFloor’s initiative is granting access to virtually any person interested in real estate investing, regardless of their income or net worth. Anyone can become an investor and the minimum investment is $100. Loan terms vary from six months to five years. As for safety measures, the company has a thorough pre-screening process for developers before they are able to list their projects. Most importantly, the loans are secured by the properties themselves, which is not a feature of other platforms that provide equity in real estate.

GroundFloor concentrates on smaller, residential projects. The pilot project for this whole new real-estate investment philosophy was the renovation of a historical single family home in Atlanta by John Mangham, a successful independent developer. The project was listed in February, and 39 Georgia residents lent the developer $40,000 to complete the restoration. The cash was raised in just five days and the developer will pay to investors 8% interest on the loan.

After the success of the pilot project, GroundFloor has now expanded to five more states (Virginia, Arizona, Illinois, Pennsylvania, and Massachusetts). The long-term goal of the company is to make this type of investment accessible to all Americans.

Other real-estate crowdfunding platforms are relying on wealthy accredited investors to raise money for their projects. GroundFloor, on the other hand, is building a platform for the rest of us, where any investor can access quality real estate investment opportunities. GroundFloor investors will invest anywhere from a few hundred to a few thousand dollars, making a safe investment that will bring nice returns on short to medium terms (from six months to five years). In other words, the company is focusing on a new market, tens of millions of potential investors, and it might just be the boost that the real estate industry and construction industry really need to make a recovery from the recession.

This type of real estate investing comes with a series of advantages for both developers and investors. Developers gain access to funds more rapidly: let’s remember that the funds for the pilot project in Atlanta were raised in just five days! Also, the developers are no longer dependent on financial institutions or accredited investors, which allows them more flexibility and creativity in their projects. Investors, on the other hand, have access to a form of investing that is safer than stock market investing and more profitable than depositing money in a bank.

One more thing worth mentioning: this form of financing is a way of bringing ethics back to real estate. Communities are offered the opportunity to back up projects that bring them something valuable, instead of dealing with real estate projects drawn by huge corporate developers who are far removed from the needs of the community.

GroundFloor makes investing in real estate projects accessible to anyone, building the path to a new way of financing the real estate industry – more flexible, more transparent, more dynamic, and more importantly: open to all.

David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City private equity advisory firm, and The Soho Loft – The Voice of Capital Formation – a global financial media company with divisions in Corporate Communications, Publishing and Expos & Events. You can reach him directly at David@LDJCapital.com.

Enhanced by Zemanta

Trump, Mondrian Hotels, Abu Dhabi and Brunei Peninsula Hotel Representatives join “Global Real Estate Crowdfunding Conference II” in New York #CrowdFundRealty

New York, April 22, 2014 (GLOBE NEWSWIRE) — It’s a #CrowdFundRealty day this Thursday, April 24, in New York!

What better way to usher that day than to gather the top honchos of the real estate industry and realty-focused family offices from all over the globe in a VIP cocktail party at the Big Apple.

Nobody would want to miss out on this swanky cocktail happening on Wednesday night, 23 April 2014 at The Soho Loft penthouse in NYC. Grab a last minute ticket and hobnob with no less than the representatives of Trump Properties, the owners of the Hudson Hotel, the Morgans Hotel Group and largest minority owner of the Empire State Building, just to name a few.

Think about the success stories churning right off the bat from the leading realty crowdfunding players as they discuss about their remarkable progress in the industry. Chances are there will be an explosion of ideas among the guests.

To pump up more excitement in the real estate arena, these companies will be joining the “Global Real Estate Crowdfunding Conference II” the next day, Thursday, 24 April 2014 at The Players Club in 16 Gramercy Park South. The conference gathers the new class of crowd investors as well as traditional and institutional investors in one big platform. Once again, this conference will serve as a vehicle to share the opportunities and new approaches that will energize and sustain the burgeoning and promising real estate market and industry.

Register now. For details, check:

http://thesoholoft.com/conferences/global-real-estate-crowdfunding-conference-ii-new-york-city/

David Drake, chairman and founder of The Soho Loft says, “Crowdfunding is rapidly changing the real-estate investment market, offering developers new ways to finance projects, giving small investors a way in, and the socially-conscious an avenue to support their local communities.”

Count Erik Wachtmeister, CEO and founder of BestofAllWorlds.com, a by-invitation-only social navigator, located in Stockholm, Sweden is giving its full support to the conference, being an ardent believer of crowdfunding himself. The Best of All Worlds is setting its  sights to become the ultimate discovery and matching platform for people as well as products and services online. It is also  providing an intimate web environment to  link global influencers and relevant connections who have the same interests, passions and backgrounds. Wachtmeister says, “So much of social media is about focusing on other people’s past. Best of all Worlds is about paying more attention to our own future.”

The conference is also proud to have the Stock & Fund Managers on board as one of its sponsors. S & F Managers has its roots in investment banking and asset management. It is the vanguard in structuring, developing and managing upscale hotel and real estate projects in the Galapagos Islands and Mar de Indias in Colombia. S & F will make its entry as the main developer of Delano Cartagena and Galapagos Villas  & Resort in South America. This amazing project features an 18-hole golf course, residential units and many other up-to-the-minute amenities operated by the Morgans Hotel Group. Alexander Oppenheimer of S & F  Managers, is excited to unveil these amazing projects and spectacular opportunities to the public during the conference. For the past years, S & F only had private exposure to investors.

The Carlton Group Real Estate Private Equity Bankers is also fully supporting the conference and its ideals. The Carlton Group specializes in raising equity and debt on big complex transactions. It also provides investment sales services for large commercial real estate assets and loans held by banks. Recently, this international real estate investment-banking firm entered the space of accredited equity crowdfunding.  It offers accredited investors the opportunity to invest in large commercial real estate assets.

Patch of Land‘s support to the conference is noteworthy. It is  establishing strategic partnerships with the leading players in the real estate, Right now, they are working with Wealthforge, the foremost crowdfunding broker-dealer network, and Kingdom Trust, the leading provider of alternative assets. AdaPia d’Errico, Chief Marketing Officer of Patch of Land says, “We embrace the opportunities for building wealth and growing communities by working together to promote crowdfunded and crowdfinanced investments.”

Other conference sponsors are Times Realty News, the only online news and publishing site that focuses mainly on real estate crowdfunding firms, projects and happenings; Global Crowd News, another media news and publishing outfit that redefines capital formation; and LDJ Capital, a New York-based private equity advisory firm that offers consultation services on fund management and business development for the energy, infrastructure and real estate industry, and strategic access to capital markets.

Just like the first conference last November 2013, the Global Real Estate Crowdfunding Conference II on 24 April 24 2014 will present tremendous opportunities to its participants. Up for discussions are the trends and growth of real estate crowdfunding, real estate investments by family offices, crowdfunding strategies for real estate, and global platforms and international crowdfunding investors. There will be plenty of time to network with the speakers during the networking lunch and the after-event cocktails.

Big and small players in the industry are sharing, tweeting, writing about this highly exciting event of the year. Use the hashtag #CrowdFundRealty to join the conversation among the real estate people and our media partners:

Equities.com, CrowdsUnite, Crowdfund Beat, Real Estate Investors Beat, Inman News, Bankless Times, and CoAssets

To register and for more details on the conference:

http://thesoholoft.com/conferences/global-real-estate-crowdfunding-conference-ii-new-york-city/

Watch for more conferences happening across the country and around the world by The Soho Loft. The next one may be in your city.

Visit www.thesoholoft.com/upcoming-conferences for more information.

About The Soho Loft  (www.thesoholoft.com)

The Soho Loft – The Voice of Capital Formation – is a global financial media company with three divisions in Corporate Communications, Publishing and Expos  & Events.

TSL Corporate Communications division handles Public Relations, Investor Relations and Social Media Marketing for its clients. TSL Expos & Events division organizes up to 200+ investor-focused events annually and TSL Publishing division produces financial and entrepreneurial content that is published and syndicated in  100+ leading online publications and growing.

As The Voice of Capital Formation, The Soho Loft Media Group  is your global communications partner for your equity and investment strategies.

MEDIA CONTACT:

Victoria Global (www.victoriaglobal.co)

Victoria Global is your leading content and communications marketing partner with expertise and network in both institutional investing and crowd financing. With a history deeply intertwined with financial innovation, Victoria Global offers an integrated approach to cutting edge public and investor relations using balanced and multi-tiered systems and strategies.

The Victoria Global integrated approach is a balanced approach: Combining thought leadership and  targeted engagement to drive a positive, sustainable and long-term impact to building brand awareness and loyalty.

The Victoria Global integrated approach is a multi-tiered approach: Linking traditional media channels and strategic optimization of new media like  blogger outreach, social networks, platforms and technologies to propel a creative, organic and solid growth to customer and audience engagement.

As your leading content and communications marketing partner, Victoria Global is all about knowing and connecting with your crowd.

David Drake + 1 917 578 9069

+1 212 845 9652

The article originally appears at: http://globenewswire.com/news-release/2014/04/22/628547/10077649/en/Trump-Mondrian-Hotels-Abu-Dhabi-and-Brunei-Peninsula-Hotel-Representatives-join-Global-Real-Estate-Crowdfunding-Conference-II-in-New-York-CrowdFundRealty.html#sthash.qiSdn3uv.dpuf

Enhanced by Zemanta

Photo by ShotHotspot.com