We have some exciting news to share with you! Beginning in June, we’ll be switching things up in an effort to give you even more interesting and useful information about Commercial Real Estate Investment and Crowdfunding.
Instead of our weekly newsletter, we’ll be rolling out a monthly wrap-up that features news about new offerings, updates on the progress of existing deals, and a hand-picked selection of articles and topical industry information that we know that you’ll find useful.
To kick it off, I’ve included some key takeaways from the keynote presentation I recently made at DePaul University’s annual real estate conference, which gives some very useful facts about the opportunities that crowdfunding has created for investors and sponsors.
Also included is a look at our recently funded Marriott Courtyard deal.
DePaul University Real Estate Center Presentation: Key Takeaways: Real Estate Crowdfunding Investing
Why invest via Crowdfunding vs. Traditional Investment Options?
Crowdfunding includes all the positive aspects of traditional real estate options, including little capital outlay and passive/indirect participation, but offers other desirable advantages including the ability to pick and choose individual real estate properties with direct ownership.
What’s the attraction of Crowdfunding for investors?
More and more investors are discovering the benefits of Crowdfunding, including asset-driven return expectations, cash flow and capital appreciation, pre-determined investment horizons and access to individual transactions previously unaccessible. Average returns range from 6-8% cash on cash annually with mid-teen IRRs.
Key facts: Hotel Investment from RPS Hotel Holdings, $3.125MM raised, 42 investors participated, cash flowing to investors and a $25k minimum investment. Many factors made this a successful deal, including that it’s an attractive property that offered strong return projections and was offered by an experienced sponsor.
Title III has been long awaited by the industry, as it is the first time that unaccredited investors can participate in a private placement. With all of the excitement though, Title III has restrictions and financial reporting requirements that issuers/sponsors should be aware of. This is important for our industry and it will be interesting to see how things progress.
Global insurance provider, American International Group, Inc. (NYSE: AIG), has announced the launch of a new insurance vehicle, Crowdfunding Fidelity, which was developed specifically to protect investors on equity crowdfunding platforms against issuer fraud. We’ve been hearing about this for years and while it’s not open to US investors yet, we are interested if/when that may change.