Real estate crowdfunding is a term that has recently taken center stage in the passive investor community. As the world worked from home collectively in 2020, it is to no one’s surprise with recent celebrated wins that the practice of real estate crowdfunding has gained even greater attention. Crowdfunding in general has been collecting pledges for tech start-ups and film dreammakers almost as long as the Internet itself has been around. Ironically though, real estate crowdfunding is a misnomer, but a ubiquitous term adopted by the real estate industry. Real estate crowdfunding is really a different animal and really only shares a name with these other examples. Still the moniker stuck as the phrase has become synonymous with real estate syndication.
And that interest has spanned all demographics. And that move from the 1% to the potential 100% should be viewed as a positive as we all benefit from our wise decisions. The platform has made real estate crowdfunding obtainable for virtually all. Consequently, the marketing deluge has followed. We’ve all seen the ads and received the email. Want to own your own hotel but can’t afford to build your own? No problem! Got an extra hundred bucks burning a hole in your pocket? There’s always crowdfunding!
But for accredited investors, these crowd funders can present a new set of complications. Case in point, many real estate crowdfunding sites act as the go-between at a cost to the investor or the property/fund sponsor. Some charge investor finder fees and/or might provide lower rates as a way to mask the crowdfunding remuneration. Fees aside, going through a real estate crowdfunding source adds a new layer of complexity for an investor: inferior service. Would you rather be one of let’s say 100 investors waiting for dividends and return on principle – or one of 10,000 or 100,000? Would you rather be one of 100 people waiting for your Schedule K-1 or…?
But crowdfunding presents some inherent problems in added fees, management chaos, and distribution delays. Of course, that’s not to say that all real estate crowdfunding sites are without merit. Some of the better ones help accredited investors find pre-vetted real estate investment opportunities for a fee.
By going direct to a multifamily real estate sponsor like Trion Properties, investors “cut out the middleman” – and the associated fees. We’ve done the due diligence and have been pre-vetted by trusted independent due diligence organizations. Finally, we limit investments to accredited investors only ensuring the utmost in service.