Real estate Crowdfunding set to top US$2.5 Billion this year
Catherine Clifford – 4th March, 2015
Real-estate crowdfunding was a $1 billion industry in the USA in 2014 and is expected to grow to more than $2.5 billion this year, according to a report released today from USA industry research firm Massolution.
Across the globe, investors and homebuyers are using crowdfunding as a way to own and profit off of commercial real estate or to finance the purchase of their own homes. In 2014, USA crowdfunding campaigns ranged in size from less than $100,000 to over $25 million.
When most people think about crowdfunding, they’re likely to think of a group of friends pulling their finances together to back the launch of a new indie film or a wallet made out of duct tape.
While still emerging, the real-estate crowdfunding industry is growing quickly. To date, there are 85 real-estate crowdfunding platforms currently in operation, according to Massolution.
“Residential crowdfunding has the breakout potential, as mortgage loan origination, a trillion dollar market, is opening up to distributed platform financing,” the report says. One example of residential real estate crowdfunding is LendInvest, a platform out of the U.K. that did $240 million worth of residential mortgage loan initiations last year.
Property investors are using real-estate crowdfunding as an alternative way to invest money they are looking to make money with. For example, on USA platforms such as Realty Mogul, many investors pool their money to buy a commercial real-estate investment with the expectation that the rate of return on their investment will be higher, with less risk, than other typical investment alternatives.
The benefit of real-estate equity crowdfunding over real estate investment trusts, or REITs, which have already been around for two decades now, is speed and diversity. “Technology allows this activity to be conducted more swiftly and more efficiently, availing the investment opportunity to more participants,” the report says.
Crowdfunding for commercial and industrial investments is growing faster than it is for residential or multi-family real estate investments, according to the report. Still, crowdfunding is being used as an alternative finance method to a mortgage from a bank for individuals looking to move into their first home. And there is significant potential in this sliver of the real-estate crowdfunding market.
funding4business recognised this emerging trend into on-line and Internet based financial services and was specifically established to facilitate peer-to-peer start-up funding and business loans to Aussie businesses.
funding4business enables crowdfunded property investments – today
We are an Aussie company, with an Aussie team, applying Aussie developed technology and know-how, to an emerging P2P alternative investment and financial marketplace for the benefit of Aussie business borrowers and Aussie investors.
We connect business borrowers with investors such as SMSFs, HNWIs, SIVs and PIVs holders for their mutual benefit.
Peer-to-peer (P2P) lending acts as a flexible investment alternative where established businesses can borrow funds and negotiate business loans directly with willing investors at mutually acceptable investment rates, terms and conditions.
The funding4business marketplace is open and transparent, offers a broad range of investment options, provides flexibility, offers potentially better investment returns, faster and simple settlement, online registration and algorithmic loan matching to your investment criteria.
funding4business was launched in Australia on 1st August 2014.