Real Estate Crowdfunding
The Jumpstart Our Business Startups (JOBS) Act, passed in 2012, encourages small business and startup funding by easing numerous federal regulations. The JOBS Act is divided into different Titles, each of which targets a different, specific area of small business funding. Crowdfunding has surged in popularity thanks to Titles II, III and IV.
- Also known as Regulation D
- September 23rd, 2013
- Allows private businesses to reach out to the public for funding
- Public funding used to be for companies on the stock market
- Birth of equity crowdfunding platforms
- Accredited investors only
The accredited investor must meet at least one of the following requirements:
- Personal income of $200,000
- Joint spousal income of $300,000
- Net worth exceeding $1,000,000, excluding his/her primary residence
Currently, less than 3% of Americans are accredited.
Title II launched crowdfunding into the limelight. In the past, crowdfunding was either donation or reward-based, offering either a small token, or simply nothing, in exchange for a sum of money. However, the passage of this title meant an entirely new type of crowdfunding: equity.
- Also known as Regulation A
- Not yet in effect
- Titled “Crowdfunding”
- Will allow anyone to purchase shares in private companies
- Creates landscape similar to stock market
- Intermediaries not subject to FINRA regulations
- New rules and regulations
It’s no wonder that Title III has not yet passed. Aiming to create an entirely new capital market requires an immense amount of regulation and confidence in a growing sector that has not yet been achieved. However, the coming years will instill confidence and trust in this sector, which will pave the way for this Title to succeed.
- Also known as Regulation A+
- June 19th, 2015
- Non-accredited investors now allowed to invest
- Two tiers of offerings for companies
- Tier 1: $20 million in 1 year
- Tier 2: $50 million in 1 year
The implication of Title IV will be enormous on the investing world. It will completely change the scope and scale of investing, allowing investors to get in on the ground floor of the future Googles and Apples of the world. This will create wealth for the common investor where, in the past, it was reserved for the wealthy and elite.
Applications to Real Estate
Real estate is one of the sectors that would most benefit from The JOBS Act.
- Real estate investors are often difficult to find
- Great deals were reserved for the elite
- Minimum investments will be low
- Access to new deals
- The JOBS Act will breathe life into this historically difficult-to-disrupt industry
REITs vs Crowdfunding
- JOBS ACT
- Investors can participate in multi-million dollar real estate investments for a fraction of the price
- Shared returns
- Targets Private Investments
- Benefits offered
- Institutional Investors
- Massive fees
Real Estate Investment Trusts (REITs)
- Publicly traded
- Moving toward privatization
- Supposed liquidity
- Only top REITs have high volume trading
- Driven partly by market sentiment
- Not just sole value of properties
- Do not offer tangibility and independence from equity markets
- Focus on stable core investments
- 90% of taxable income must be disbursed to shareholders
- Risk during economic downturns
- REITs strapped for cash
- Potential for aggressive growth
- Value-Add and Opportunistic
- High-risk, high-return
- Variety of deals
- Pool money together to participate in real estate private equity
The ENDVEST Difference
With the JOBS ACT now making crowdfunding investing possible, the space is rapidly expanding, giving rise to various platforms available for eager investors. Let’s discuss what differentiates ENDVEST, and if we’re right for you.
The world has become increasingly smaller through globalization, but opportunities for independent investors are larger than ever. With registration, you gain access to ENDVEST’s unique global database. From coast to coast and country to country, registered investors have endless opportunities. Whether it’s around the corner or around the world, ENDVEST believes that investors have the right to build communities while reaping profits.
At ENDVEST, don’t sit on the sidelines: be a star player. From start to finish, you will receive frequent updates on the facts and progress of projects. ENDVEST is a truly democratic platform; unlike other platforms, you do not have to be a registered, accredited investor to view our deals. ENDVEST was created with the small-time investor in mind: say farewell to exclusion and elitism, because investments will start as low as $500, available to even the most novice of investors.
From the novice to the expert real estate investor looking to diversify their portfolios, education is essential. At ENDVEST, any registered user has access to our original and premium education center. Our education center is simple, easy to follow, and can turn even the most novice real estate investor into an investing guru. You can learn all things real estate through articles and infographics on crucial real estate terms. Once you’ve polished your skills, your opportunities are endless.
Illiquidity turns investors away from the security, diversification, and potential growth that real estate offers. At ENDVEST, illiquidity shouldn’t be a barrier, and ENDVEST EXCHANGE was born. ENDVEST EXCHANGE (END/EX) is a revolutionary secondary market to buy and sell investments on existing projects to other investors. ENDVEST EXCHANGE launches soon, and it promises to revolutionize the private real estate market forever.