Real Estate Crowdfunding and Hedge Fund Cash
Behind the scenes, real estate crowdfunding platforms may be looking beyond their accredited investors in funding commercial real state loans of stature. Recent closed investment bridge loan deals of over $10M are putting the pressure on the real estate crowdfunding platforms to get more cash infusion from direct capital hedge funding sources.
The mom and pop accredited investor entry fee amount typically is around $10.000. This will require a number of commercial capital investors outside the individuals to fund a deal of this size. As the realty crowdsourcing sites move their advertising network out to the commercial bridge loan world, the amount of funding may outpace the typical investment entry capital.
The main point in this is that property crowdfunding loans that are assisted with larger corporate institutions changes the landscape on this already new field of investments. Realty crowdfunding has been around forever in semantic terms of peer to peer lending, hard money, private real estate loans, bridge lending, etc. However the platform being pitched today via the JOBS act, is only a few years old. The reshaping and remodeling of crowd sourcing to include the larger business hedge funds may affect the ultimate round of what realty crowdfunding really will become.
The cash input of pure investment from the largest commercial real estate companies overshadows the real estate crowdfunding platform model by an order of magnitude. Many of the crowd sourcing hedge funds are in ranges below the capital required for larger development funding.
Commercial Real Estate Crowdfunding a Bridge Loan
In this year our industry will see a huge influx of commercial buildings renovated specifically for the tech industry. As in the WeWork mode of utilizing non performing commercial real estate to facilitate the creative office space phenomenon. WeWork’s current valuation of $5B means this is the way to go, tech meets real estate. Renovation financing on this scale means leveraging properties in the hundred of millions after retrofits and interior architectural upgrades. Real estate crowdfunding is working the commercial bridge loan model as a marketing target but will need outside capital be in the position to fund these types of corporate industrial quadrants.
Crowdsourcing funds outside the crowd
The fact that crowdfunding for real estate platforms are looking for cash “outside the crowd” may or may not be a concern to the individual investor. However, the whole terms “ real estate crowdfunding loans” may become “crowd assisted financing”. The end game to look out for is when larger experienced hedge fund companies finance the crowdfunding platforms. These global hedge fund companies will obviously demand some margin of control and a larger share in the profits.