Although millions of dollars have already been earned and invested in real estate crowdfunding, the movement is still relatively new. It took an historic conflagration of market challenges, technology, and legislation just to make real estate crowdfunding possible. Now, it’s on pace to become a multi-billion-dollar industry nationwide by making financing available to borrowers largely shut out by traditional banks and lenders.
How did real estate crowdfunding become a mainstream phenomenon? Historically, only very wealthy investors had access to diversified real estate investments. Investing relatively small amounts of money in many different real estate projects was extremely uncommon, if not impossible. It wasn’t until lawmakers attempted to spur lending in the wake of the 2008 banking disaster that real estate crowdfunding became inevitable.
In 2012, President Obama signed off on the Jumpstart Our Business Startups (JOBS) Act, allowing startups to raise up to $1 million in capital without having to register securities with the SEC. Then, in 2013, the SEC opened the door further for real estate crowdfunding by allowing more direct marketing and solicitation of accredited investors, removing restrictions on the solicitation of funds online.
Prior to the JOBS Act legislation, private real estate investment transactions outside of traditional banks and financiers required a great deal of hustling, selling, and networking. The law discouraged private investments marketed publicly, and the best investments were reserved for the wealthiest, most elite, and best-connected investors. There was no avenue for middle-class private investors without millions of dollars to build large, diversified real estate portfolios that they chose and managed themselves.
The enactment of the JOBS act changed all that. Suddenly, real estate crowdfunding grew very quickly. Speed, in fact, is what real estate crowdfunding is all about. Today, the industry is in a unique position to connect borrowers to capital from accredited investors, largely minimizing the previous barriers to secured funds for real estate development projects. The crowdfunding platforms that streamline this process, including Zeus CrowdFunding, are a gateway to funding all sorts of promising real estate projects.
There is likely more growth on the horizon, too. Young investors are 10 times more likely than Baby Boomers to use online investing platforms, even though this type of investing is growing among the over-50 crowd. Naturally, as Millennials’ wealth and influence increase, online investing platforms are likely to benefit.
The JOBS Act may have ushered in the era of tech-driven online real estate borrowing and investing, but those participating in it will shape the future of the industry. Real estate operators and investors are already reaping the benefits. Are you? The advantages of tech-enabled investing will only continue to grow as the industry evolves.
Whether you’re looking for funding for your real estate project, or looking for a sound way to get into financial investments in real estate, you can capitalize on this historic movement with Zeus CrowdFunding.