CCIM November Luncheon


Speaker: Dan Niemeyer, REALTY SHARES – “Crowdfunding” (“CF”)

Takeway: Crowdfunding started about twenty years ago as an online method funding ‘starving artists and musicians’, and today it is being used to raise both capital and equity from investors small and large for residential and commercial real estate deals.

  • There are several sizeable CF organizations now in the residential and commercial real estate industries, following relaxing of federal regulations pertaining to protecting smaller investors, ‘accredited’ and not
  •  In 2012 CF organizations were given more latitude in raising money through small investors- Go Fund Me is one of the earliest groups to raise small sums
  • By 2013 CF was further opened up to a diverse range of investing possibilities
  • Residential bridge loans were the first vehicles to be offered to small investors, and since then loans and equity pieces have become more varied and more numerous
  • The sweet spot in the market for CF funds seems to be for developers doing deals in the $2-20 million range- CF funds often allow the developer to retain more ownership in deals while at the same time gaining leverage through blending interest rates between CF investor-lenders and commercial banks
  • CF funding takes away the need for developers to go to ‘friends and family’ for equity, and allows the developer to do more deals in a shorter period of time equity pieces can often be raised  through CF in thirty days as opposed to much longer through previous ‘traditional’ methods
  • CF companies are becoming diverse and more segmented in the different kinds of deals they do
  • CF shops stress-test developer deals before offering them to their investors
  • Some commercial banks are still not fully comfortable coming in behind equity supplied via CF