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Real Estate Syndication in the Digital Age
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See several case study examples of prominent real estate crowdfunding marketplaces.
Keywords
- case studies
- real estate crowdfunding platforms
About this video
- Author(s)
- Adam Gower
- First online
- 07 October 2020
- DOI
- https://doi.org/10.1007/978-3-030-59470-1_8
- Online ISBN
- 978-3-030-59470-1
- Publisher
- Palgrave Macmillan
- Copyright information
- © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020
Video Transcript
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So let’s take a look at some of these websites really quickly. Like, say, there are about 50 of them, so it’s– we can only go through a few of them now. But I’m going to go through some that have different characteristics.
So PeerStreet, when you invest with PeerStreet, you’re actually investing in debt. So they make loans to– or they are investing in real estate backed loans, and they pay you a percentage of the yield that those loans are paying. So you’re basically investing as though you were the bank. If you’re investing in the loans, you are lending to a borrower, effectively, and you’re receiving an interest payment, so there’s no backing.
What’s interesting about PeerStreet, which is fairly consistent with some of the better websites out there, is that they have these incredible dashboards where you can see how your investments are performing. It looks like you’re investing through Charles Schwab in stocks if you invest in a range. So that’s kind of the high point here is just to see how they are representing the kinds of investments or your investments in a dashboard.
Now, FundRise, I mentioned, are doing Reg As. So they are– they’ve created funds, and you invest in the fund according to your risk profile. And then they go out, and they use that capital to invest in a range of different types of real estate, or a range of products or properties across the country. And that way, you’re able to diversify really effectively through investing in their fund.
CrowdStreet, they’re one of the biggest. They’ve actually recently announced that they had raised the first billion dollars– isn’t that incredible?– of equity. And they have sponsors who list their properties on the CrowdStreet platform, on the CrowdStreet marketplace. You can go into CrowdStreet, take a look, see what kinds of deals that are in there, and decide which ones you want to invest in. They also pre-screen all the deals for you. That’s their– that’s their pitch.
SmallChange is, as I mentioned, one of the only regulation crowdfunding platforms. And that’s run by Eve Picker. Actually, I’ve spoken to her a couple of times in podcasts, so you can listen to her story there if you want to.
And then KBSDirect, very interesting. Chuck Schreiber is the S in KBSDirect. And what’s interesting about KBS is that they are actually raising a billion dollars from crowdfunding. They specialize in downtown skyrise office buildings and are, in fact, in the– latest I saw, one of the top three office owners in the world. This is about as institutional as you could possibly get, is KBSDirect.
So that’s just a very quick overview of a handful of different types of investment, different types of web– different types of website and marketplaces where you can invest. In fact, KBS– to be clear, KBS is a sponsor. They’re not a marketplace. They only raise money for their own deals. So that’s the distinction. Debt, equity, funds, accredited, non-accredited investors, and individual sponsors who are raising money directly– that’s basically the gamut of opportunities available to you.
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