4 Growth Factors in Real Estate Crowdfunding

David Drake  |

One of the biggest Real Estate Crowdfunding Conferences took place on January 24 and 25 at the 2015 Real Estate Investor Expo in Dallas, Texas with 1100 participants.
The discussions that I produced under The Soho Loft Conferences brand brought together real estate thought leaders, industry professionals, crowdfunding firms, investment fund managers, entrepreneurs, investors, media and academia to explore trends, strategies and other issues affecting the real estate investment sector.

Here are the four major topics that dominated the real estate crowdfunding conference discussions that can propel the industry forward:

1. Real Estate Online Funding Trends

Crowdfunding is revolutionizing the way investors invest and entrepreneurs raise capital. Discussions around crowdfunding for real estate as a new asset class took center stage during the conference. Crowdfunding offers new opportunities for enterprises in their startup, growth and early stages to solve the problem of capital access.

FundAmerica's Founder and CEO Scott Purcell says, "There are millions of small businesses in America that have no way of accessing capital as well as hundreds of millions of small investors seeking opportunities to create jobs and help businesses grow. Crowdfunding creates a platform for these two entities to interact." FundAmerica developed a crowdfunding site in 2013 using a $1.4 million investment raised through an angel investors group.   

Entrepreneurs that will engage in crowdfunding should be diligent and observant, for it opens up market and job opportunities. To prepare entrepreneurs for this, especially going for online deals, the conference agenda factored in a  crowdfunding workshop on day one: "Building a Real Estate Crowdfunding Platform".

2. Investment and Funding Environment

Conference attendees participated in discussions about institutional and crowd investors in the real estate. Investors perceive real estate as a safer, less risky investment. Investing in this sector through crowdfunding enables them to diversify and stabilize their investments. It offers real estate developers alternative sources of capital and allows investors to put small amounts of capital in real estate projects.

Before crowdfunding came into being, investors who wanted to invest in real estate had to find individual real estate firms and invest in them. This has changed as crowdfunding now allows investors to invest directly in projects and properties that they identify and wish to invest in. The future of real estate financing formed a good part in the discussions around investment and funding environment.

According to Bruce Lipnick, Founder and CEO of Crowd Alliance, "the support of angel investors through crowdfunding, will enable small business and startup entrepreneurs to raise capital to fund new and growing businesses." Crowd Alliance merges mainstream financing approaches with technology enabling investors and entrepreneurs to interact through a modern platform.

3. Crowdfunding Regulatory Environment

Even as crowdfunding gains popularity among entrepreneurs and investors, the regulatory environment is yet to get fully established. The signing of the Jumpstart Our Business Startups (JOBS) Act into law in April 2012 was a great milestone towards making crowdfunding legal. However, the Securities and Exchange Commission (SEC) is yet to put in place regulations that will allow unaccredited investors to invest a maximum of one million dollars through crowdfunding.

This is a major drawback in crowdfunding for equity that could delay real estate entrepreneurs in launching large scale projects. As SEC puts the crowdfunding regulations in place, the Financial Industry Regulatory Authority (FINRA) is also developing control systems that will regulate crowdfunding portals. All these regulatory processes are likely to be completed by the end of 2015 and crowdfunding for equity will realistically commence in 2016.

4. Financial Efficiency

As online funding trends begin to change, the question of financial efficiency arises. The Real Estate Conference featured several sessions to discuss new market trends and the future of finance in the real estate sector. Conference attendees participated in discussions on "Reshaping the Future of Finance and Real Estate," "New Markets: Cultural Shifts and Economic Trends" and "A New Ecosystem: Innovations in Investor Communities."

The two-day conference featured a host of experts in various fields who enriched discussions with their wealth of knowledge and experience.

Jorge Newbery, CEO of American Homeowner Preservation and one of the moderators and panel speakers, said “The most successful platform operators in the long-term will likely be those that apply equal vigor to doing deals as they do functions such as executing disciplined compliance protocols and following detailed policies and procedures,” He further added, “Other steps such as setting up data collection systems and underwriting deals according to a well-defined criteria can be essential for long-term growth.”

Crowd Realty Advisors would be honored to join David and any of the other panelists again as part of ‘The Soho Loft​’ events," says Steven Waldman, Co-Founder of Crowd Realty Advisors.

Sam Vogel, Co-Founder  and Head of Strategic Business Development at RealtyWealth says, "This conference hosted in Dallas by The Soho Loft Media Group and REI was well attended, boasted the Founders of the top portals in the industry as speakers and was very insightful. It was particularly interesting to hear about the recent institutional interest and developments as the industry evolves, the hyperbolic pickup in transactions and how the various market leaders are refining their niche products and investors. Expect to see consolidations, institutional buyouts and international expansion in 2015!"

Eve Picker, President of Small Change, said “I wanted to thank you again for including me in your program in Dallas. I had a lot of fun, learned a lot and hopefully contributed something as well. I hope you have me back!”  

“The future of Crowdfunding is bright,“ DiversyFund Founder and CEO Craig Cecilio said. He further added, “It was a pleasure speaking alongside the industry leaders to gain different perspectives of where the future of real estate crowdfunding is heading. DiversyFund believes that Real Estate Crowdfunding will have a significant impact on how we finance Real Estate Projects and Ventures.”

Andrew Steel, Founding Member of KC iFund, says “The crowdfunding organizations that were displayed at the REI Expo were impressive. The groups represented expertise from across the country and in all sectors of the industry from compliance to structuring. KC iFund is excited to be a part of this industry and we look forward to forging new potential partnerships and creating fresh ideas.”

Gabrielle LeVota,  ‎Executive Director at Professional Real Estate Investors and Managers Alliance (PREIMA), says “The conference and expo venue was a premiere place for 1100+ professional real estate investors to come together to network, grow wealth and achieve success.” Moreover, she added “The REI Expo is the only national event that provides the opportunity for diversifying one’s portfolio and cross pollinating across multiple fields in the industry. We pride ourselves in  cultivating positive educationally rich environment – so all the sessions are pure education, not pitch fests,  which led to the success of this event, year over year and across the country.”

The Real Estate Expo featured 81 educational sessions, 125 exhibitors and two exhibit halls that were used for two presentations. Other sponsors and partnered companies of the event include Victoria Partners, LDJ Capital, Times Impact Publications,Times Realty News, GridSpeak, In3Finance, Energy Finance Strategies, RE3CAPiTAL, Mechatron Solar Inc., Village Power Finance, Allotrope Partners, Rocky Mountain Institute, Clean Path, Clean Fund, GSSG Solar,  Energy Ensemble, Full Circle Biochar, Renewable Funding LLC, Municipal Solar, Institute for Environmental Entrepreneurship,UtilityAPI, SunRenu Solar, Bright Plain Renewable Energy, Clean Focus, Open Energy Group, Growing Energy Labs, Piedmont Partners Group Ventures, LLC, and Variety Energy.

Breakout sessions were slated in the agenda to allow for discussions on the mission of the Professional Real Estate Investors and Manager's Alliance (PREIMA) and the struggles experienced by Real Estate Investors group leaders. The conference also featured a one day entrepreneurship workshop for the youth. The next Real Estate Investor Expo will be held in Indianapolis on June 6-7, 2015 while the PREIMA Hawaii Global Conference will be on  March 6-10, 2016. For more real estate crowdfunding conferences, check www.thesoholoft.com/upcoming-conferences.


DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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