For most real estate crowdfunding platforms, common practice is that a project be fully funded before the developer is able to move forward with the project. By doing this, developers may run into some issues which would cost them time and money, such as the property being sold to another developer prior to the project being fully funded, or for real estate investors, having their investment sit dormant during the funding process.
While real estate crowdfunding has certainly sped up the process, there is still a delay. Potential projects are left waiting. That is…unless the deal is prefunded!
While many real estate crowdfunding platforms run into these typical issues, companies such as Patch of Land offer their developers and investors prefunded real estate crowdfunding options. In fact, they were the first to introduce prefunded real estate crowdfunding, and have become a recognized leader in peer-to-peer lending solutions and alternative lending methods.
These prefunded loans are alternative solutions to traditional lending methods and open up many opportunities for both real estate borrowers and the investors. Developers are able to get started on their projects sooner, deals are funded quicker, and investors are able to see a return on their investments, all while adding some diversity into their current investment portfolio.
Immediate Funding for Borrowers
By offering prefunded real estate opportunities, Patch of Land is able to give their borrower almost instantaneous funding, allowing them to begin work on their projects immediately, and without delay. Typically, the entire process – from start to finish – can take as little as five to ten business days! Once the project has been through the acquisitions and underwriting team, if approved, the loan is prefunded and work can begin. This allows Patch of Land’s developers to save time and money, and offers the chance to take on more projects in the future.
While this may sound like a lot of advantages to only the developers, real estate investors can also benefit from Patch of Land’s prefunding real estate investments. Once an investor chooses their investment project and contributes their funds, they are able to begin accruing interest once their contribution clears escrow. This allows investors to immediately benefit from their investment, whereas other real estate crowdfunding platforms require the deal to be fully funded before investors see a dime. Sometimes, this can take weeks, months…or longer!
Patch of Land also provides investors with access to all documents pertaining to a project, and allows complete transparency when choosing investment projects. Investors can make their own educated decisions when it comes to diversifying their portfolio with short-term investment opportunities starting at $5,000. When you add the chance to earn an average return between 10-18%, it’s a no-brainer!
Not every crowdfunding platform has the confidence in their projects to prefund their deals, and many do not offer a stringent due diligence process, such as Patch of Land. Their system combines highly sophisticated scoring engines with a Make Sense underwriting approach, which takes into account humanistic factors that computerized intelligence cannot quantify. This allows a better and more accurate risk assessment during the loan approval process.
If you’re interested in learning more about becoming a national real estate investor, or prefunding for real estate, jump in and get educated about what the real estate crowdfunding platform can do for you as a developer or an investor! This emerging sector is growing each and every year, and continues to create more waves in our industry. Don’t get left behind. The possibilities are endless!
Jason Fritton is Co-Founder and CEO of Patch of Land, a leading alternative solution for real estate financing that brings borrowers and lenders together through a simple online interface. The Company's goal is to solve the problem of inefficient, fragmented, and opaque real estate lending by using human-powered technology and data-driven processes to create transparency and efficiently underwrite projects. Jason originally conceptualized Patch of Land in early 2011 as a means to help rescue parts of Chicago devastated by the real estate crash. He has been involved with crowdfunding legislation since the beginning and worked with Congressmen to advocate for the crowdfunding exemptions that were written into the 2012 JOBS Act.
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