Crowdfunding in RE

Any of you fools done a crowdfunding deal in RE?

haha yea i’ve seen it. looks interesting, but not interested.

Sounds like another way to charge you more fees on an asset class with already outrageous fees.

I have a small allocation. I’m not sure exactly what I think about their credit administration and underwriting practices yet, but wanted to see what is being offered.

What’s the advantage of this over a REIT with the same property profile?

On a side note, I was talking to Angel List investor relations to see if I wanted to invest in one of their VC “Index Funds”. Anyway, wow, those guys really take you for a ride. It’s like they are only doing it to take money from their investors, amiright?

There are a few things here. First, there is debt and equity crowd funding. As a result, you can construct an exposure more precisely to what you want in terms of structure, geography, or any other preference that you can have based on the data. Another is the “same property profile” clause. Lots of these deals are causing disintermediation in the hard money lending segment, that was less efficient but too small for institutional capital. Third is that some claim they can do it at a lower expense base than reits, but I haven’t verified this since I don’t own the pseudo reits (some of these platforms offer their own reits with quarterly liquidity periods etc). The benefit to those structures can also be behavioral, as it makes it harder to sell. I’m not particularly interested in the baby sitting aspect, but the rest is interesting. A common theme with a lot of these crowd funded sites is returns decline over time because they are bringing capital to less efficient markets. I’m less comfortable with the real estate lending than consumer (collateral adds additional stuff I have to trust them to do, but I don’t have a way to verify they are doing what they should) but I also know this will probably be the highest returns for the asset class, if it’s successful.

Well, I guess what most people do nowadays is they talk to some real estate broker and buy individual investment properties with 5% closing costs. So, if some company can facilitate this same deal more efficiently, then that adds value to the transaction.