NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.
Crowdfunding for Investors: Updated Investor Bulletin (U.S. Securities and Exchange Commission, Oct. 14, 2022)
“The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to educate investors about securities-based crowdfunding.” In this bulletin find information about how to make a regulation crowdfunding investment and how to calculate net worth. The bulletin then details the risks you should consider before making a crowdfunding investment, as well as places to access educational materials regarding crowdfunding investments.
Real Estate Crowdfunding: Should I Consider It? (The Balance, Dec. 30, 2021)
“Crowdfunding, which started as a donation-based way to raise money, has become a popular form of real estate investing. When you participate in real estate crowdfunding, you pool your money together with many other investors to fund a particular project. If all goes well, you all earn passive income from it. In this guide, you’ll learn what real estate crowdfunding is, how it differs from other forms of real estate investing, and whether it’s right for you.”
Crowdfunding Models: Keep-It-All vs. All-Or-Nothing (Financial Management, Jun. 2020) E
“Reward‐based crowdfunding campaigns are commonly offered in one of two models via fundraising goals set by an entrepreneur: "Keep‐It‐All" (KIA), where the entrepreneur keeps the entire amount raised regardless of achieving the goal, and "All‐Or‐Nothing" (AON), where the entrepreneur keeps nothing unless the goal is achieved. We hypothesize that AON forces the entrepreneur to bear greater risk and encourages crowd funders to pledge more capital enabling entrepreneurs to set larger goals. We further hypothesize that AON is a costly signal of commitment for entrepreneurs yielding a separate equilibrium with higher quality and more innovative projects with greater success rates.”
Real Estate and Crowdfunding
The Best Real Estate Investing Apps (Business Insider, May 1, 2023)
“Investing in real estate doesn't have to be difficult. If you're looking to avoid the legwork of conducting extensive property research, finding tenants, and regularly maintaining and attending to the investment, there are easier ways to add real estate to your portfolio. Real estate crowdfunding platforms make this possible. You can add residential properties, commercial properties, and other real estate investments to your portfolio at low costs. Some of the most common investments these platforms offer are real estate investment trusts (REITs), electronic real estate funds, and non-traded REITs.”
Regulation Crowdfunding: Closing CRE’s Racial Wealth Gap (Wealth Management Real Estate, Jan. 2, 2023) E
“A lack of diversity is evident in real estate investment, amplified by rules explicitly excluding many people from the market: Until recently, investment opportunities were only available to accredited investors, i.e., the very wealthy. Only 8.25 percent of the American adult population qualifies as an accredited investor, and of this group SEC estimates that only 1.3 percent are Black and only 2.8 percent Latino. But change is in the wind thanks to regulation crowdfunding. Launched by the SEC in 2016, it enables anyone 18 or older to participate in investment opportunities. It hasn’t been around long, but it is already starting to have a significant impact on diversity in development and investing.”
Real Estate Crowdfunding: What to Know Before You Invest (Boston Business Journal, Dec 8, 2021)
“Once the exclusive arena of only the savviest investors, real estate crowdfunding platforms like Crowd Lending, Inc. have broken down barriers to entry, allowing individuals to reap the benefits of alternative real estate investment assets…If you’re new to the world of real estate investing, it’s important to keep in mind that not all real estate investment platforms are created equal. Before investing, it’s critical you understand the structure of the investment platform and its specific advantages and disadvantages.”
Crowdfunding REITs: A New Asset Class for the Real Estate Industry? (Journal of Property Investment and Finance, 2021) E
“The paper aims to study the performance of crowdfunding REITs with respect to traditional REITs in order to evaluate the differences in the risk–return profile and their usefulness for a diversification strategy within the indirect real estate investments. The paper considers the crowdfunding REITs introduced after the JOBS Act in the United States and evaluates their performance and risk during the time period 2016–2018. Performance achieved by crowdfunding REITs is compared with other types of REITs in order to evaluate their usefulness for constructing an optimal portfolio strategy based on a standard mean variance approach.”
When Online Lending Meets Real Estate: Examining Investment Decisions in Lending-Based Real Estate Crowdfunding (Information Systems Research, Sep. 2020) E
“Lending-based real estate crowdfunding, which involves the use of real estate to secure loans, has emerged as a promising alternative with lower risk than peer-to-peer lending. This study provides insights into understanding how lenders' investment behavior is shaped by various information in such an emerging market. Using a data set from a large platform over 17 months, the authors find that lenders as a whole prefer loans secured by a borrower's house to those secured by a mortgage, as reflected in quicker and larger lending transactions. Experienced lenders tend to invest more aggressively, in both time and amount, but exhibit a weaker preference for loans secured by a borrower's house.”
Real Estate Crowdfunding Platforms
CrowdStreet is a software and services company disrupting the commercial real estate industry by enabling innovative real estate operators and developers to efficiently engage in online capital formation, communicate with investors, distribute investment documents and centralize ongoing investor relations.
“EquityMultiple is best for accredited investors who have at least $5,000 to invest (minimums can also be as high as $30,000). This platform lets you invest in institutional commercial real estate, equity, preferred equity, and senior debt. When it comes to real estate investments, EquityMultiple offers a range of property types, including: multifamily, office, industrial, storage, car wash, cannabis facilities, retail, mixed-use, opportunity zones, senior living facilities, student housing, and data centers.”
Fundrise is an online investment platform for commercial real estate, often times referred to as a crowdfunding platform or investment marketplace. Fundrise gives investors the ability to: Browse investment offerings based on investment preferences including location, asset type, risk and return profile; Transact entirely online, including digital legal documentation, funds transfer, and ownership recordation; Manage and track investments easily through an online portfolio; receive automated distributions and/or interest payments, and regular financial reporting.
Patch of Land
Patch of Land is crowdfunding real estate through its P2RE (peer-to-peer) online marketplace offering various typologies of secured real estate debt on assets backed by first position liens and personal guarantees. We match investors and lenders seeking alternative fixed income opportunities to borrowers seeking alternative sources of financing for their real estate investment needs.
RealtyMogul.com is an online marketplace for real estate investing. We are often referred to as a crowdfunding platform, marketplace lender, or peer-to-peer lender. Whatever term you choose to use, we are here to connect investors who want to invest in real estate with real estate companies that need real estate capital – either debt or equity - it’s that simple.
RealtyShares is an online investment platform that brings together investors, borrowers, and sponsors. Accredited or institutional investors can invest in pre-identified commercial real estate investment opportunities with as little as $5,000. Legal document signatures and fund transfers can all be handled securely through the RealtyShares platform, so that investors can complete the entire transaction through the website.
“YieldStreet offers real estate and other alternative investments to accredited investors who have at least $500 to invest. You can currently invest in the following alternative asset types with YieldStreet: real estate, legal finanace, marine finance, crypto, commercial and consumer finance, and art finance. YieldStreet also has more lenient investment terms compared to some of the other real estate apps… Yieldstreet is also primarily available to accredited investors, or individuals with a net worth of at least $1 million. If you're a non-accredited investor, you can still invest with Yieldstreet, but you'll only have access to one fund: Yieldstreet's Prism fund.”
eBooks & Other Resources
The following eBooks and digital audiobooks are available to NAR members:
Crowdfunding: A Guide to Raising Capital on the Internet (Audiobook, eBook)
Crowdfunding: The Corporate Era (Audiobook, eBook)
The Crowdfunding Handbook (Audiobook, eBook)
Crowdfunding for Beginners (eBook)
Equity Crowdfunding for Investors (Audiobook, eBook)
The Everything Guide to Crowdfunding (Audiobook, eBook)
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