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Real Estate Crowdfunding: What’s In It for the Accredited Investor?

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  |  By Christopher Orr, SDIP

It’s hard to have a discussion about the rise of crowdfunding these days without some mention of one of its more popular subcategories – real estate crowdfunding.  Over the last year alone, real estate crowdfunding platforms have raised more than $175 million for hundreds of properties across the U.S.  And with crowdfunding still in its infancy and real estate demand continuing to rise, all signs would indicate this trend is still in its early innings.

Just as crowdfunding has effectively democratized private equity, such is also the case with real estate crowdfunding. If you’re an accredited investor, real estate crowdfunding platforms can give you direct access to real estate investments across the country, regardless of your location.  For a small real estate investment you can now pool your money with other investors to lend money to or purchase shares in properties or real estate investment projects.  And the fact that you can invest small amounts across various real estate ventures means you can build a real estate investment portfolio with levels of diversification never before possible. 

What’s also intriguing about real estate crowdfunding is how it’s revolutionizing the broader real estate investing landscape.  For one, as real estate crowdfunding grows, the prevalence of the “landlord” by its traditional definition shrinks.  If you’ve ever invested in a rental property, you’re probably all too familiar with the ongoing headaches that come with being a landlord.  Through real estate crowdfunding, you own part of a property without the midnight phone calls demanding you fix a leaky faucet – in essence, you can participate in the property’s upside potential without any of the management responsibilities.

The more accredited investors continue to adopt real estate crowdfunding as their primary means of real estate investing, the more these once distinct asset classes will start to look the same. For the last 25 years PENSCO has been helping investors use their retirement funds to invest in real estate so it’s no wonder that we are starting to see investors contacting PENSCO to make these types of real estate crowdfunding investments part of their retirement portfolio as well.

If you would like to learn more about real estate crowdfunding, check out our 2015 Crowdfunding Report:

*Editor’s Note: This is an updated version of a post we originally published in September 2014. We welcome new comments and questions below.

PENSCO’s Blog is purely for educational purposes.  PENSCO does not provide investment, tax, or legal advice nor does it evaluate, recommend or endorse any advisory firm or investment vehicle. Individuals are encouraged to seek professional advice before making any investment decision. Investments are not FDIC insured and are subject to risk, including the loss of principal.