I Festival Crowdfunding en CAMON Madrid (Photo credit: Espacio CAMON)
Crowdfunding And Real Estate - A New Environment
Over the past five years the concept of crowdfunding has created an entirely new perspective on how to raise capital for projects. What started as a way to raise a few thousand dollars to make a video or produce a CD has morphed into an exciting new world of financing. In 2011 over $1.5 billion was raised in these small projects. It is believed that number doubled in 2012.
With the passage of the JOBS Act last year, there is now a new focus on equity crowdfunding. With the current and anticipated changes in the Regulation D elements of the SEC rules on small business capital raising, there will be billions raised in new equity offerings.
Many small groups are already applying this concept to real estate, raising money in increments of $100,000 to $1,000,000. Whereas many people used real estate partnerships over the past two decades, this new vehicle opens significant new opportunities.
The final rules for SEC compliance are expected to be published in the next few months. These rules will allow millions of new investors with billions in equity to participate in these real estate deals.
A significant additional change in the equity raise rules allows use of the Internet to publicize an offering. That means that an entirely new marketplace is being created where average individuals will be able to participate in crowdfunding real estate deals across the country.
Anyone involved in development or related activities will find exciting opportunities made available by the new crowdfunding rules.