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Examples of Real Estate Crowdfunding in Action

As this decade draws into its second half, there are plenty of exciting developments afoot in the technology sector. One of the most exciting, and one that promises to remake the way the economy functions, is real estate crowdfunding. In the years to come, real estate crowdfunding is expected to grow into a major player in the marketplace, carrying with it the potential to push the United States economy forward.

To be sure, though, the effect that real estate crowdfunding is having on the economy is already evident. A number of different projects have used this platform to come to fruition, and still more entrepreneurs are using it to fund their dreams. Even further, real estate crowdfunding is offering relief to homeowners and homebuyers who are finding themselves left behind in the current economy.

Notable Projects Realized Through Real Estate Crowdfunding

In many places in the world, the evidence of real estate crowdfunding’s effects on the economy is becoming visible. There are a number of development projects that have used this method to raise their funds, rather than securing those funds through the traditional methods of the past.

In New York City, the financial hub of the world, there are several projects that are coming together that have made use of real estate crowdfunding. For example, Prodigy Network, according to Forbes, recently purchased 17 John Street in the city. Over a quarter of the $85.3 million that was used to purchase the property was secured through real estate crowdfunding. With the property now purchased, Prodigy Network plans to begin converting the property into an extended stay hotel. To do this, they’re hoping to raise $41 million by again making use of real estate crowdfunding. Several investors also raised significant funds for the purchase of 84 Williams Street in Manhattan.

Projects funded through real estate crowdfunding aren’t just taking place in the United States, though. They’re also taking place internationally. Perhaps the most high-profile example of this is the BD Bacatá, which is being constructed in Bogotá, Columbia. When it’s finished, the building will be the tallest in the city, and it will be the first skyscraper built in the country in over three decades. All of the money necessary to build the skyscraper was raised through real estate crowdfunding, with nearly 4,000 individual investors taking part.

As these projects, and others like them, take shape over the years to come, more and more people will be aware of the power that real estate crowdfunding has to reshape the economy and the spaces in which we live. It’s truly an exciting time, but these projects are not the only reason to be excited.

Real Estate Crowdfunding is Helping Individual Entrepreneurs

Given cheap housing prices over the past several years, many would-be entrepreneurs have become involved in flipping houses. This is a process by which a disused property is bought at a discount, renovated, and then sold for a profit. For the entrepreneur the benefits of this practice are obvious. But, house flipping also assists the communities in which it takes place. Without owners, these properties would stand disused and abandoned, lowering the value of surrounding properties. By flexing their entrepreneurial spirit, house flippers help communities avoid this outcome.

The sweeping changes that have taken place in the United States mortgage market have seriously affected the ability of individuals to purchase properties. In turn, this has seriously affected the ability of those imbued with the entrepreneurial spirit to ply their trade. With mortgages harder to secure, those that flip houses have been severely limited in their efforts.

As CNBC points out, though, real estate crowdfunding has offered a means through which these house flippers can secure the financing necessary to purchase property. The underwriting process for real estate crowdfunding is different than that which a house flipper would encounter with a larger financial institution, and things such as the house flipper’s track record can be taken into account. This creates a win-win situation, wherein the house flipper can do what he or she does best, and the investors can reap the benefits of providing that entrepreneur with the loan that he or she needs.

Real Estate Crowdfunding is Helping Homeowners, Too

Ultimately, the housing market in the United States is struggling to reflect the state of the modern world. Real estate crowdfunding is helping to close that gap. While the regulations that have been introduced to offer more security in the mortgage market have helped the economy to stabilize overall, they’ve left many homeowners and homebuyers in a bind.

In the current climate, many who would’ve been able to become homeowners several years ago are no longer able to. This necessarily leads to many properties remaining vacant and declining home values for those who live around these homes. While the mortgage market may eventually catch up to the demand for homeownership, real estate crowdfunding is doing its part to close the gap.

Just as house flippers are able to use real estate crowdfunding to secure their properties, so too can prospective homebuyers use the platform to secure theirs. In addition, those who currently own a home and are facing foreclosure due to rising interest rates and adjustable mortgages or balloon payments have a way out. They can use real estate crowdfunding to refinance and to stay in the homes that they’ve come to love.

The Best is Yet To Come

As with any other emerging technology, real estate crowdfunding is sure to evolve significantly over the years to come. For one, many are anticipating that it will become more open to smaller investors, giving those who were previously denied the ability to invest in real estate the opportunity to do so. If this happens, then real estate crowd funding can become an engine of wealth creation, which will only help to stoke the fires of entrepreneurship. These are exciting times we live in, and real estate crowdfunding is one of the biggest reasons why.

 

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