A few weeks back I attended the REI Expo at the National Harbor in Washington DC, an amazing venue. One thing that was unusual for me was the potential for using crowdfunding to fund larger, buy and hold commercial real estate deals.
If you're looking for an overview of crowdfunding, its history, and most popular portals, please read Anki Duggal's excellent article on BiggerPockets.com called “Crowdfunding Real Estate: How to Raise Money through the Crowd“.
In its short history, crowdfunding was mostly used to fund short-term projects via debt (at fixed interest rate), which is perfect for residential fix and flip projects. In this way, a crowdfunding portal can act a bit like a hard money lender, but with better terms.
What appears to be happening, however, is that even “traditional” debt crowdfunding portals like Patch of Land (who spoke at the conference) are starting to set their sites at funding larger buy and hold commercial investments. Jason Fritton, Patch of Land's CEO, said that the crowdfunding landscape is changing rapidly.
In fact, some sites like iFunding.co use crowdfunding to raise equity (not debt). In the past, they have done 50/50 partnerships with house flippers. And that is now also evolving, as iFunding is starting to raise money for buy and hold investments.
In the short video I did for the BiggerPockets.com, I talk about what terms iFunding is offering after my discussion with Ken Tse, Director of Business Development with iFunding.
OK, let's watch the video!