The Voice for Real Estate 37: Crowdfunding & Closings
How can real estate pros benefit from crowdfunding, which is set to expand in 2016 because of new SEC rules? There are two ways: by working with clients who use it to expand their real estate assets and by using it yourself to build your brokerage. Crowdfunding is a top story in The Voice for Real Estate news video for the week of January 11, 2016. Other stories look at transaction delays stemming from closing rules that took effect in October, new tax changes that will increase foreign commercial real estate investment, and the registration requirement for drones.
- Closing Rule Delays
- Tax Changes for Foreign Real Estate Buyers
- Drone Registration
Get more on all the topics covered in this video:
Voice for Real Estate 37: Transcript
Crowdfunding & Closings
Stephen Gasque Voice Over:
Is crowdfunding a way for you to raise capital?
Lenders are getting up to speed on new closing rules.
And what's going on with drones? We'll have the latest update.
These stories and more on The Voice for Real Estate
Hi, I’m Stephen Gasque with the National Association of Realtors.
New rules take effect later this month that make it easier for businesses to raise capital by tapping small investors through a process called crowdfunding. If you’re in commercial real estate, crowdfunding opens the door to more sales and lease opportunities by giving businesses an alternative to Wall Street for raising money. And if you own a brokerage, it may be a way to expand your business.
Last year crowdfunding generated $16 billion and new rules from the U.S. Securities and Exchange Commission are expected to increase that figure. The first of those rules takes effect later this month. David Sobelman, founder and CEO of Generation Income Properties, a real estate investment trust in Tampa, Fla., explains why his firm is using crowdfunding to raise $20 million and go public.
You can hear more from Sobelman on Realtor Magazine’s Speaking of Real Estate blog. And look for more on crowdfunding in the weeks ahead.
Are you seeing closings delayed while lenders get accustomed to the federal closing rules that took effect October 3? NAR research has found closings are taking five days longer than they did before the new rules, and NAR Chief Economist Lawrence Yun has said the new rules might have contributed to a drop in closings in November.
The rules are designed to give buyers more time to look at their closing paperwork, and certain last-minute changes can result in delays. But for many lenders, it might just be a matter of taking extra care while they learn a new way of processing loan applications. NAR’s William Gilmartin has more.
Richard Cordray, the director of the Consumer Financial Protection Bureau, which wrote the rules, sent a letter last month to lenders assuring them that his agency is not looking to punish them for making small clerical errors and typos. That could help speed closings by calming lenders’ concerns over adverse actions by the CFPB.
For foreign investors, the U.S. commercial real estate market will remain destination number one for 2016, according to industry reports. The main reason is the strength and stability of U.S. real estate markets, particularly as unrest grips other parts of the world. But the tax bill Congress passed at the end of last year will help, too, because it eases a tax requirement for foreign owners of U.S. real estate when they sell their holdings. It also reduces obstacles foreign investors faced in putting more money into real estate investment trusts. NAR’s Evan Liddiard has more.
The tax bill also includes an extension of 15-year depreciation period for leasehold improvements, an NAR priority, and an energy efficiency deduction for commercial buildings. And it extends a qualified real property expensing provision. You can get more on all of these tax matters at the NAR Government Affairs page on nar.realtor.
You might recall last year, right before the holidays, the Federal Aviation Administration made it a requirement for everyone who owns a drone as a hobbyist to register it. The goal is to hold people accountable if their drone causes an accident or violates someone’s privacy.
What hasn’t changed is the rule for the commercial use of drones, which includes using drones in real estate. Right now, operating a drone commercially requires what’s known as a Section 333 waiver. If you’re operating a drone as part of your business, or you’re working with someone who is, that operation requires a waiver. Later this year the FAA will release another rule that’s expected to expand the commercial use of drones even more. NAR’s Stephanie Spear has more.
So, whether you’re operating a drone as a hobbyist or you’re incorporating them into your business, the FAA has requirements for you.
And that’s our show for the week of January 11. You can get more on everything we talked about today at The Voice for Real Estate page on nar.realtor, Thank you for joining us and be sure to join us again as we bring you the latest news on The Voice for Real Estate.