The $2.5 Billion Goldmine


It’s been called the ultimate disruptive force for real estate… Quickly bridging the commercial divide, crowd funding is linking average, accredited investors to property once thought attainable by only wealthy families and institutional investors.

That’s no longer the case though…

As long as you’re an accredited investor, you’re in, as we just saw with a highly publicized crowd-funding deal with the Hard Rock Hotel Palm Springs in 2014.

Accredited investors had an opportunity to fund a piece of the 163-room hotel’s $1.5 million crowd funding campaign to fund entertainment, spa expansions, and a possible nightclub with a potential return of 15% to 17% in five years.”

“Owners won’t have a say in how the money is spent, but they will get VIP treatment any time they visit the hotel. Perks include free use of poolside cabanas, 25% off the best available room rates, room upgrades and food and beverage discount,” reports USA Today.

Two months after the campaign began, the hotel raised $1.5 million.

According to The Desert Sun, “In what is believed to be the first online offering of its kind for a hotel, 85 investors from across the country bought minority equity stakes in the 163-room, music-themed hotel.”

“Individual investors in the hotel will receive part of the income from the hotel through quarterly rental payments and appreciation of the hotel when it is sold. They’ll also get special perks and VIP benefits, including free use of the hotel owner’s poolside cabana, discounts on room rates and room upgrades.”

That’s quite a deal… and simply highlights the great power of crowd funding efforts.

I’ve been talking about this for months… and it’s only getting hotter, as is commercial real estate.

In fact, according to a March 2015 article from Entrepreneur, “Crowdfunding for real estate is already a billion-dollar industry and it’s expected to more than double this year.”

"Across the globe, investors and homebuyers are using crowdfunding as a way to own and profit off of commercial real estate or finance the purchase of their own homes.

Real-estate crowdfunding was a $1 billion industry in 2014 and is expected to grow to more than $2.5 billion this year, according to a report released today from industry research firm Massolution. In 2014, campaigns ranged in size from less than $100,000 to over $25 million.

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.

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.”