When many people think about crowdfunding, they think about an effective way to fund smaller-scale projects: maybe a film, gadget or some other creative project. While you’ll still find plenty of these on Kickstarter, it is real estate that is quickly moving to the forefront of the crowdfunding world.
Real-estate crowdfunding – in which issuers use 506b or 506c offerings to fund real-estate ventures – has exploded of late and, as Entrepreneur reported last week, some big names in venture capital are beginning to take notice.
In this model, investors pool money until they are able to purchase a property or group of properties, then take a share of the rent and any profits from the property’s eventual sale. Investors benefit from the greater transparency of the crowdfunding model, which in turn has the potential to increase the accessibility of the real-estate investing market. Like in other areas, only accredited investors can engage in real-estate equity crowdfunding across state lines, but several states have already passed provisions opening the marketplace to anyone in the state.
Check out how the Launcht 506 Offering System offers everything you need to launch your own real-estate platform.