The buzz about crowdfunding for real estate just keeps on growing. However, more than just a trending Twitter topic it could have the potential to change the property and finance industries for good. In fact, it is already significantly altering the playing real estate investment playing field in Massachusetts.
The media’s love affair with crowdfunding for real estate seems to burn hotter every day. It may be true that the final implementation and pivot on Rule 506 and Title II of the JOBS Act didn’t play out exactly as many had hoped. However, it has not doubt brought about a lot more awareness of crowdfunding, spurred the launch of at least several new platforms for raising money, and has opened the doors to investing to many more individuals.
Many have seriously underestimated how big of a deal crowdfunding is for the industry. It doesn’t just enable a wider cross section of the population to enjoy the rewards of the best real estate projects, or enable even better and more innovative projects to be developed. The added efficiency, the speed and technology provides means better spreads and total returns.
Some would argue this could be a serious threat to some of the bigger and older industry players as well as banks who haven’t maintained a very shiny record for taking care of their customers of late.
However, perhaps most significantly in the short term this offers incredible opportunities for smaller Massachusetts investors to step up into the big leagues and dramatically increase their incomes and wealth in a very short period of time. Those flipping houses or holding small multifamily properties can now easily scale up to take on larger apartment buildings or even develop or expand retail properties.
All MA real estate sectors are looking up, but many have been warning about competition and declining inventory levels impacting those focused on single families. So crowdfunding really couldn’t have found its wings at any better moment for allowing more investors to embrace commercial real estate and get in on the new retail property surge.
Of course just throwing a project up on the internet ‘wall’ and expecting the world to come flooding in with millions of dollars automatically may not be realistic. There are some bizarre projects being funded with hundreds of thousands of dollars, but a peak behind the scenes shows that it takes a little strategy and effort to pull off a crowdfunding campaign.
Fortunately between the power of Google+ for search engine optimization, ease of getting your own press releases published in the news and hiring freelance copywriters thanks to the recent merger of oDesk and Elance successfully getting a campaign funded doesn’t have to be that difficult. However, those newer to this arena will find that the more transparency and credibility they can borrow, by outsourcing elements such as property management and due diligence, the better traction they’ll receive.