Good news for real estate investors: Crowdfunding, the group money-raising technique that has been increasing in popularity, has become a big hit in the real estate industry. A recent Miami Herald article
illustrates how a growing number of real estate investors are finding success by involving a group in their deals.
The article mentions various websites out there dedicated to real estate crowdfunding. These platforms have already raised more than $135 million in debt and equity for real estate deals, according to The Wall Street Journal.
This makes real estate the fastest-growing crowdfunding category. This is a big deal, considering that this type of fund-raising has been slower to come onto the scene than others, but it hasn’t become accessible to the ordinary investor just yet:
Though the 2012 federal JOBS Act legalized crowdfunding as a means to raise funds for startups and other ventures, the rules governing such transactions have been released in waves. In September 2013, the U.S. Securities and Exchange Commission modified securities rules to allow advertising of such deals, which opened the door to crowdfunding platforms being used by more-sophisticated, accredited investors. The final rules governing ordinary investors are expected later this year, but an SEC spokesperson declined comment.
Those who aren’t “accredited investors” — investors with a net worth of at least $1 million or $200,000 in annual income – are finding other ways to raise capital for deals. One strategy used is self-directed investing.
Ever since the IRA’s creation in the 1970s, investors have had the option to partner their retirement funds with other investors’ funds to invest in real estate and many other things. These self-directed IRAs give investors flexibility to make deals that might have been out of their reach otherwise.
Find out how you can get started with self-directed IRA that allows you to partner with other investors to buy real estate – schedule a free one-on-one IRA checkup
with one of our knowledgeable Senior Account Executives.