One of the biggest real estate crowdfunding questions for the coming year will be the impact on the residential investment real estate market. There are a number of predictions that the commercial real estate market is going to benefit from access to unaccredited investors. Marshall Saunders of SaundersDaily, mentioned he thinks that commercial real estate will benefit specifically in the $200,000 to $1,000,000 market segment,
| "Crowdfunding has been used mostly for multi-family projects (along with a few single-family fix-and-flip deals), typically about four to 40 units in size. He expects that to change, based on “two huge gaps in real estate and investment...A $5 million to $20 million project can get funded right away, but projects in the range of roughly (depending on the market) $200,000 to $1.2 million are often too large for one individual and too small for traditional CRE funding, so that niche is underserved." |
While the numbers vary on the total number of residential fix and flips happening currently through crowdfunding, it looks like we will definitely find a greater number of available options as the overall capital requirements for a residential fix and flip are usually lower than a commercial investment. (This is also true with the real estate investing insurance requirements.)
How these lower capital requirements will be handled under the Title III change, is yet to be fully determined. One of the best aspects of the coming changes is the
As Nav Athwal (@navathwal) writes in Forbes,
| On the other hand, it (crowdfunding) could have a much more positive impact if these newly initiated investors are funneling their cash into something like real estate. This decision effectively opens up a new asset class that’s not correlated with the stock market, which in this volatile environment could be a good thing. The commercial real estate market alone is valued at roughly $15 trillion and the rule changes offer access to a much larger pool of investors, without making net worth a pre-qualifier. |
Will Crowdfunded Real Estate Break $3 Billion in 2106?
Recently, some predictions for the crowdfunded real estate market estimate it to grow to $3.5 billion in 2016. I don't think the question any longer is whether or not, crowdfunding will grow into a large source of financing, but where will the financing flow?
Will we see the biggest boom to the commercial or residential real estate sector in 2016?
