CRE investors drawn to crowdfunding opportunities

Crowdfunding websites like Kickstarter have provided the financing for projects ranging from Hollywood movies to new business startups, and opportunities catering specifically to high-net-worth commercial real estate investors in Illinois and around the country are offered by the online financial marketplace CrowdStreet. Since 2014, investors have had 60 offerings worth about $1.7 billion to choose from, and many of these CrowdStreet marketplace projects were oversubscribed in less than 30 days.

The CEO and co-founder of Portland-based CrowdStreet reports that June and July 2016 were the most successful months in the company's short history, and he said in an interview that he expects even faster growth in the future. He claims that virtually all other commercial real estate financing portals do little more than provide online versions of institutional financing, and he believes that today's investors are seeking a more comprehensive solution and are taking a more hands-on approach.

In addition to providing wealthy investors with a range of commercial real estate projects to choose from, CrowdStreet offers a suite of back-end software that 47 sponsors use to manage funds valued at about $400 million. Crowdfunding efforts raised more than $34 billion in 2016, and the unorthodox approach is expected to generate more investment than venture capital in 2016.

While crowdfunding websites like CrowdStreet may provide high-net-worth individuals with more commercial real estate investment options, investors sometimes have to act decisively before offers become oversubscribed and opportunities are lost. Attorneys with experience in the commercial property market may understand that time is often of the essence when the sums involved are large, and they could make efforts to provide investors with the data they need to make informed decisions as rapidly as possible.

Source: Forbes, "Trends Show Crowdfunding To Surpass VC In 2016", Chance Barnett, June 9, 2015

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