June 19, 2015: New Crowd Funding Rules Apply
This is exciting. At one time, only accredited investors had access to lucrative commercial real estate deals.
That meant -- according to the US Securities and Exchange Commission – you had to have annual income of $200,000 per individual or $300,000 per couple, or a net worth of more than $1 million if you were interested in the lucrative world of real estate crowd funding.
But that’s no longer the case.
Starting this June 19, 2015, reports CNN Money, “every day investors will be able to back real estate projects with Kickstarter-like crowd funding initiatives.”
It’s a literal, modern day gold rush for smart investors. And it’s catching on like wild fire.
“Many commercial property developers are now using crowd funding platforms to raise capital for their projects. That means people who want to invest in billion dollar properties now have access to once unapproachable real estate projects -- albeit for very small shares of the business,” notes CNN Money.
Take for example, the Hard Rock Hotel Palm Springs.
Accredited investors could 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,” reported USA Today.
Now every day investors can take part in similar deals.
However, as exciting as this is, we have to remember there are pitfalls to crowd funding, as I noted here.