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Crowd Funding in Real Estate Investing: A New Trend in Lending $$$!

By Ron and Alexandra Seigel

Services for Real Estate Pros with Napa Consultants DRE00893924

July 14, 2014 07:19 AM

A recent social phenomenon is crowd funding. It was originally developed to help small businesses that could not get loans in the conventional way. Recently this method has expanded to real estate at large. It facilitates raising money for real estate developers’ looking to finance a new project, small investors to begin investing in real estate, helping consumers buy homes, and those who want to help save farmlands and small farmers in their communities.

Here is a list of those companies involved. Keep in mind that some are in beta state, and this is a new form of lending money. We have included the links to these organizations, if you care to investigate these companies further.

Fundrise for the socially conscious, focused on rehabilitating properties.

Realty Mogul incubated by Microsoft, where for $5000 an investor can buy shares in properties, which have been vetted by experts.

RealtyShares where for $500 you can buy shares in commercial real estate, apartment buildings and homes.

Fquare Investing in viable farmland for as little as $5000. They have a program in place where farmers can deliver their harvest to food banks in lieu of paying rent.

Primarq (Nasdaq) for residential real estate equity can match investors with consumers wanting to buy homes by buying shares.

iFunding chooses real estate projuects and share the profits. For a $1,000 minimum, you can buy into a piece of the sites portfolio.

We are living in innovative times. What is your opinion of this?

Written by Ron & Alexandra Seigel-

ABOUT: Napa Consultants, International is the leader in brand strategy for the luxury real estate industry. They work exclusively with professionals who are passionate about gaining or sustaining market leadership. With an expertise in personal branding, company branding, luxury real estate website design and social media marketing they help their clients become the breakaway brand in their marketplace.

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Debb Janes

Nature As Neighbors - Camas, WA

Put My Love of Nature At Work for You

I'm hoping it has positive effects - always worry about the downside we can't yet see. At first glance though, it does seem innovative and could spur more real estate sales. That seems pretty positive. ( I do love René and his optimistic view point. ) I'm generally optimistic, but tend to be a bit cautious until I see (learn)more...

Jul 14, 2014 07:45 AM

Ron and Alexandra Seigel

Napa Consultants - Carpinteria, CA

Luxury Real Estate Branding, Marketing & Strategy

Rene,

I agree, we just had a friend who funded her brand new yoga studio in Georgia using crowd funding. She is keeping all her lenders abreast of the progress of the studio as it is being built out, etc. She would not have been able to do it otherwise, it helped make her dream come through.

Debb,

I feel the caution button also, but I am intrigued. We have a friend who video tapes and streams all the crowd funding seminars. The population at large has really gotten into it, and they are paying $1200 just to hear it live via streaming. Even big companies that want to fund a project (such as a new app) are looking and getting funding via crowd funding. I was enchanted by the idea of saving farms and farmers, and rehabbing old buildings for history and character. A

Jul 14, 2014 07:50 AM

Jim Paulson

Boise, ID

Tammy Lankford,

Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA

Broker GA Lake Sinclair/Eatonton/Milledgeville

I see this as charity, not an investment. I don't think you can make money at this. I would/have donated to "save my home" campaigns on line and "save this farm" campaigns without expecting to ever be repaid.

Jul 14, 2014 07:52 AM

Ron and Alexandra Seigel

Napa Consultants - Carpinteria, CA

Luxury Real Estate Branding, Marketing & Strategy

Tammy,

I see your point, and according to my friend and others who are involved in older forms of crowdsourcing, there is money to be made, and money has been made. Large Venture Capital firms are investing, and they are usually very good at vetting things...time will tell. A

Jul 14, 2014 07:57 AM

Noah Seidenberg

Coldwell Banker - Evanston, IL

Chicagoland and Suburbs (800) 858-7917

That is really interesting Ron & Alexandra. I wonder if this investing style is anything like a Hedge Fund or something like you see on Shark Tank (love that show).

Jul 14, 2014 08:15 AM

Ron and Alexandra Seigel

Napa Consultants - Carpinteria, CA

Luxury Real Estate Branding, Marketing & Strategy

Noah,

We are big fans of Shark Tank, and I would not be surprised if it was part of the stimulus for this type of funding. A

Jul 14, 2014 08:17 AM

Roy Kelley

Retired - Gaithersburg, MD

This is interesting. I wonder how they are getting around securities regulations. I would be very wary of these offerings if they are not registered.

Jul 14, 2014 08:23 AM

Jim Paulson

Boise, ID

Endre Barath, Jr.

Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA

Realtor - Los Angeles Home Sales 310.486.1002

Alexandra, I see the "Caution Light" going up in my head, too many people out there are scammers and I would fear the after effects of the crooks taking average middle class peoples' money. Now if they could be monitored, regulated etc. I might feel different. In some ways it reminds me of the Bitcoint Scamms out there...but I guess I might have been jaded by the Bernie Madoff's of the world....Endre

Jul 14, 2014 08:33 AM

Jim Paulson

Boise, ID

Ron and Alexandra Seigel

Napa Consultants - Carpinteria, CA

Luxury Real Estate Branding, Marketing & Strategy

Roy and Endre,

Whenever you sell shares you have to vetted by the SEC (Securities Exchange Commission). We have a friend who has a company that he has not started yet, where he sells share, and he went through a lots of scruitiny. Of course, nothing is guaranteed. I just find it interesting. I think that a lot of this started, when people where doing micro loans in the third world. People repaid and with interest...and the villages benefitted from employment. A

Jul 14, 2014 09:16 AM

Patricia Feager, MBA, CRS, GRI,MRP

DFW FINE PROPERTIES - Flower Mound, TX

Selling Homes Changing Lives

Interesting... but wary.

Jul 14, 2014 09:38 AM

Gayle Rich-Boxman Fishhawk Lake Real Estate

John L Scott Market Center - Birkenfeld, OR

"Your Local Expert!" 503-739-3843

R&A~innovative and inexpensive, really. Do YOU invest in any of these? I'd be interested to know.

Jul 14, 2014 10:12 AM

Joe Petrowsky

Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT

Your Mortgage Consultant for Life

Good morning A & R. Read about this concept before and so far it seems to be working and should continue. This type of investing is not for everyone, but ideal for someone that is a passive investor.

Jul 14, 2014 07:44 PM

Debbie Reynolds, C21 Platinum Properties

Platinum Properties- (931)771-9070 - Clarksville, TN

The Dedicated Clarksville TN Realtor-(931)320-6730

Well I am sure they can help as do hard money lenders help investors. But you pay and pay big.

Jul 14, 2014 11:00 PM

Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400

The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY

Long Island Condo and Home Specialists

Hmmm, I'm always skeptical about these sort of fundings. Not really sure about this...

Jul 15, 2014 01:08 AM

Suzanne McLaughlin

Sabinske & Associates, Inc. (Albertville, St. Michael) - Saint Michael, MN

Sabinske & Associates, Realtor

I think it could be a great idea. Especially for folks like your yoga instructor friend.

Jul 15, 2014 03:04 AM

Wanda Kubat-Nerdin - Wanda Can!

Red Rock Real Estate (435) 632-9374 - St. George, UT

St. George Utah Area Residential Sales Agent

Very interesting methods Ron & Alexandra, If people invest money with the thought they may not get a return, it is more like giving to a good cause (and can be a write off) but if the money grows, then why not help another to succees and reap the rewards?

Jul 15, 2014 03:42 AM

Michael Jacobs

Pasadena, CA

Pasadena And Southern California 818.516.4393

Hi Alexandra and Ron -- I am also a fan of Shark Fan but as Kevin O'Leary often says "show me the money". It will be interesting to see how/if this develops.

Jul 15, 2014 05:23 PM

Mary Stewart

Keller Williams Atlantic Partners/Southside - Jacksonville, FL

I think the concept is wonderful, and will boost real estate transactions and help a lot of small businesses. The investments would be relatively safe, and these investments are not big ticket items. It's many people throwing a few dollars in the pot, and hopefully helping a farmer, a smal business owner, etc. It is something I would do, and I would feel good while doing it.

Jul 16, 2014 10:25 AM

Les & Sarah Oswald

Realty One Group - Eastvale, CA

Broker, Realtor and Investor

It is an interesting concept. I am all for it as long as there are regulations and protection in place for all involved. In this day and age, too man opportunity for scammers.

Jul 16, 2014 11:58 AM

Jim Paulson

Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID

Owner,Broker

I will have to pay more attention to these for real estate but also think that the SEC will be watching very closely to any with any return on investment claims. I know too many examples that inflate the value before dividing up the pie to create a return for themselves first.

Sep 06, 2014 01:52 AM