The State of Real Estate Crowdfunding in 2019

Real estate crowdfunding is currently one of the most popular ways to raise capital for real estate investments. In April of 2012, crowdfunding burst on to the scene with the inception of the “Jumpstart Our Business Act” also known as JOBS. This act was signed into law under former President Barack Obama.

According to the SEC: “The Act required the SEC to write rules and issue studies on capital formation, disclosure, and registration requirements.” Additionally, the act allowed companies or individuals to raise and solicit a certain amount of funds from private investors.

According to recent studies, crowdfunding is on the rise. It is expected that within the next decade, the crowdfunding industry will be a $300 billion force. However, recently RealtyShares —one of the more established crowdfunding companies began laying off employees, and are no longer taking in new deals. So, how is it possible that this company could have fallen on such hard times when the crowdfunding industry seems to be thriving?

Many believe it was due to poor management on an internal level, a number of competitors gaining popularity, and the replacement of RealtyShares’ founder Nave Athwal. Even with their hardships, they still maintain a reported $400 million in assets. Investors, buyers, and enthusiasts will have to wait to see what the future holds for the company.

In the interim, while we wait on the fate of RealtyShares, many other companies such as CrowdStreet, Realty Mogul, PeerStreet and Fundrise seem to be doing quite well. Each platform offers different options, terms, and conditions to its investors and borrowers — so if you are thinking of using a crowdfunding site be sure to research the specifics of each. Currently, some of the most popular categories that investors are funding via these sites include Food & Beverage, Entertainment, Retail, and energy based projects.

Though crowdfunding is relatively new in comparison to other ways to raise money for real estate investments, it is quickly becoming one of the more profitable categories when it comes to bringing investors and entrepreneurs together. Though in each category, it is important to research prior to choosing a crowdfunding option; it can create many new opportunities and help you fund a new business, open a profitable company, or just diversify your portfolio.

From an internal standpoint, as more and more crowdfunding companies appear, the current ones will have to figure out how to remain ahead of the curve and profitable to both investors and borrowers.