Real estate crowdfunders have disrupted the status quo of residential real estate investing with online platforms that put new opportunities — once the domain of the wealthy — into the hands of Main Street America.
“If you want to go quickly, go alone. If you want to gar far, go together.”
The growth of real estate crowdfunding into a billion-dollar industry has been nothing short of phenomenal, and the sector has a bright future. Already, it has brought real estate investing to the masses while changing the way people and businesses invest and borrow.
There were limited options for non-owner occupants from Main Street America who wanted the financing to establish a real estate portfolio, or who wanted to invest in the deals of bigger players. This dynamic began to change in the wake of the housing crisis. Alternative lenders emerged to meet the needs of real estate investors who saw opportunities to rebuild the nation’s residential real estate market after the 2008/2009 financial crisis, but who were stymied by limited financing options.
Entrepreneurs who recognized the opportunity developed innovative technological solutions to address some of the problems facing the housing finance market. They developed online lending and crowdfunding platforms to provide efficiencies, speed, 24/7 access, transparency, national reach, and lower costs to the investor/borrower.
Real Estate CrowdFunding & Peer to Peer Lending
A joint study by the University of Cambridge and the University of Chicago suggests the sector “hit its stride” last year. “The 2017 Americas Alternative Finance Industry Report” has some interesting statistics:
- Total market volume for alternative finance was $35.2 billion in 2016, up 23% over the prior year. (The data covers the United States, Canada, Latin America and the Caribbean with the majority of the volume, $34.5 billion, in the U.S.)
- Marketplace, or peer-to-peer, lending makes up the bulk of the alternative finance volume, about 60%, while real estate crowdfunding accounts for 2.3% of the volume.
- Real estate crowdfunding is on a fast-growth trajectory, increasing its volume by 70% to $821 million in 2016 from $483.8 million in 2015. (Souce)
RECF with Housing Joint Venture
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