The high-speed evolution of real estate crowdfunding

In 2015, real estate crowdfunding platforms such as have become some of the quickest, easiest, and most thorough ways to analyze and invest in all types of real estate opportunities. Just as CNBC (founded in 1989) and other television and online business channels and online trading websites helped the stock market boom throughout the 1990s and beyond due to the ease of analysis and investing, crowdfunding platforms for real estate are allowing better visibility and access to quality properties and packaged pools of mortgages for small individual investors and larger institutional funds.

A high percentage of people today want to purchase goods and services as quickly as possible in our ongoing Digital World at either the lowest discounted prices and / or from businesses which offer the highest rates of return. The high-speed evolution of interacting with others and making investment decisions continues to rapidly increase at seemingly hyper-speed progress. Investors benefit from an increased access to deal flow that they otherwise would not have seen, and profit from these online platforms’ ability to find, analyze, underwrite, and fund high quality real estate deals, nationwide.

Initially, it was the discounted online Travel industry which offered aggregator sites like Expedia, Kayak, Orbitz and Travelocity, which compiled and analyzed massive amounts of data in less than a second or two. These travel sites then provided the customer with the best travel investment options. Before spending money on a dream vacation in Hawaii, the Caribbean, or Europe, the challenge is to find investments which let one’s money work hard while one enjoys the well deserved rest and relaxation. Earning money while you sleep or travel is perhaps the best way to invest these days; real estate crowdfunding platforms are one of the best ways to make this idea possible, with deal transparency and full investment control just a mouse click away.

Since 2012 and the creation of the JOBS (“Jumpstart Our Business Startups”) Act, the total combined investment amounts in crowdfunding platforms for real estate increased from $2.7 billion and almost doubled to $5.1 billion by 2013. By 2014, investments in crowdfunding platforms for real estate almost doubled once again to $10 billion plus. Will investment amounts continue to double and compound each year for the real estate sector?

Worldwide, the total combined investment amounts for all types of crowdfunding investment options are alleged to be close to $11 trillion dollars. If just a small portion of this $11 trillion dollar amount is invested into U.S. real estate assets in the near term, then the combined value of crowdfunding platforms for real estate may later surpass REITs (Real Estate Investment Trusts) in the United States.

The Social Media Revolution

Shortly after the crowdfunding sector began to increase in popularity as a way for individuals or groups to raise capital for various ventures such as charities, business start-ups, education, and later with real estate investments, many people who worked in the financial industry believed that crowdfunding would potentially hurt the venture capital sector in regard to funding start-ups or other investment opportunities. Yet, crowdfunding has emerged somewhat in tandem with venture capital firms as well as other sophisticated types of financial entities to attract more money away from conventional banks and seemingly overvalued stocks and bond funds. Both venture capital firms and real estate crowdfunding platforms are convincing their investors of the relative safety and consistently high rates of returns after several solid years of performance history.

With social media and the rest of the internet worldwide, real estate crowdfunding firms are able to market and find investors with a fraction of the advertising budget paid by some of the largest banks in the USA today for print media, online, and television advertising. Social media has also allowed potential investors to review real estate investment opportunities within literally seconds or minutes online as well as provides them quick access to detailed and thorough reports and other data

The most watched video series on the “Social Media Revolution” is published by an economics, marketing, and data trend company known as Socialnomics. Per their own statistics regarding social media worldwide, here were some of the more interesting social media trends for 2014:

* In 10 years, 40% of the Fortune 500 may no longer exist.
* LinkedIn has the ninth (9th) largest population in the world.
* Under 50% of the world’s population is under 30 years old.
* More people own a mobile device than a toothbrush.
* Each day, 20% of the terms typed into Google have never been searched before.
* “Selfie” is now a word in Webster Dictionary.
* The minimum age limit to join LinkedIn has recently been lowered to 13 years of age.
* Grandparents are the fastest growing demographic on Twitter.
* The average person today has a 7 second attention span. A goldfish has 8 seconds.

Online Vetting, Qualification, and Digital Underwriting

* Digital Money: Transactional usage of physical money like bills and coins in any number of currency options worldwide is becoming increasing rare. Approximately 97% – 99% of all forms of money used in the USA are now in the forms of computerized digits as opposed to physical cash. If this trend doesn’t reverse any time soon, then future physical money options may disappear completely.

* Digital Payment Options – Many people rely upon their “smart” or mobile devices more so than any other types of devices or even other people for daily advice and functions such as bill payments, investment options, travel plans, finding restaurants and grocery stores, and creating calendars. Digital payment options like Apple Pay, Google Wallet, and Samsung Pay are just a few of the many ways to make payments or investments from one’s mobile phones or computer desktops. Many of these digital payment options are linked directly to a person’s bank, credit, and / or debit card accounts.

* Digital Analytics – Real estate crowdfunding platforms are leading the way by using some of the most sophisticated and lightning quick analytic systems and best pre-vetting systems when searching for the most profitable real estate investment opportunities such as discounted properties and mortgage notes in addition to better qualifying their potential investors. Prospective investors in these same platforms can review these up to date, real-time investment reports prior to making investments at the click of their computer keyboard or mouse. Real estate crowdfunding platforms are becoming the equivalent of online stock investment platforms partly due to the ease of access to detailed information and data trends at a moment’s notice.

* Digital Currency – Some real estate crowdfunding platforms and online and offline escrow companies are beginning to allow digital currency investment options by way of some of the better known versions of digital currency such as Bitcoin. With the usage of digital currency options, there are potentially higher degrees of anonymity and privacy when using these newer versions of digital currencies or crypto-currencies. Some other popular types of digital crypto-currencies include: Ripple, Litecoin, Namecoin, Peercoin, Dogecoin, and Primecoin.

* Digital Diversification – With the access to detailed individual and packaged pools of properties and mortgages nationwide, a higher number of investors can invest in more than one specific investment opportunity by way of their computer or mobile devices. Instead of placing “all their eggs in one basket” with only one investment option, real estate crowdfunding platform investors are able to invest in multiple properties at once or one specific property or mortgage deal which greatly interests them.

* Digital 3rd Party Systems: Both investors and real estate crowdfunding platforms need competent, reliable, and professional third party systems in order to assist them with the online investment process. Some of the most well-known online companies which act somewhat akin to escrow, title, bank underwriting, accounting, and identify confirmation businesses are Fund America, Accredify, and Crowdcheck. These companies, and others like them, help the real estate crowdfunding platforms and investors better confirm that the individual or packaged properties or mortgages are safe to invest in and that the investors are qualified to make these investments.

* Digital Communities – In today’s online world, a higher percentage of people may have developed more online relationships, personal and business, than actual “real world” relationships with physical face to face meetings. Investors and financial or real estate firms can share information at a much more rapid pace online than by way of “old world” marketing methods from print media such as physical newsletters, postcards, or letters mailed through “snail mail” at near 50 cents stamp prices per piece.

Social media share is of growing importance today in online digital communities such as Facebook, LinkedIn, Google +, Twitter, Instagram, Pinterest, and many other sites. Over the past few years, upwards of 90% of all homeowners and mortgage loan prospects have found their potential properties and mortgage loan products online first prior to seeking out their real estate agent and / or mortgage broker or banker. Real estate crowdfunding platforms are continuing to increase the usage of these “social media share” trends by providing informative and educational content.

* Digital Returns – The more efficient and effective the analytical systems used by real estate crowdfunding platforms for various types of real estate investments today, then the higher the potential returns which may be shared with their investors partly due to less overhead and cost of capital. Real estate crowdfunding platforms continue to eliminate the “middleman” (aka “Big Banks”), and share their profits directly with the investors instead of with the Big Banks’ shareholders or executives. Less overhead typically leads to much higher profits for investors.

Real Estate Crowdfunding Platforms’ Financial Solutions

The ongoing evolution of the crowdfunding sector and the seemingly infinite compounded power of crowdfunding platform aggregator sites and computer analysis systems will analyze deals, prospective deals, and potential qualifying investors at faster than the blink of an eye. Individual investors and many other sophisticated investment firms like Hedge Funds, REITs, and banks may not be able to effectively compete with crowdfunding platforms in the near term due to the constraints caused by legacy technology systems and banking processes.

Real estate crowdfunding platforms such as Crowdventure are leading the way with creative and detailed analytic systems, informative online content and a wide range of pre-vetted, underwritten investment opportunities. Many investors today don’t want to take weeks or months to find a decent investment opportunity which offers them actual true net positive returns. They want great deals and profits now instead of negative net returns offered by their local banks. Equally as important, investors want experienced management professionals to help manage their returns almost as easily for them as a click of their computer mouse or mobile device keyboard while they are more focused on trying to better enjoy life. To these investors, real estate crowdfunding platforms deliver access to potentially ideal investment opportunities.

Matthew Sullivan – @mattsullivanco

Images supplied by Shutterstock

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