As advances in technology sweep across most industries on a global scale, real estate has been no exception, with one of the more talked about concepts being crowdfunding.
In 2017 alone the US saw $17.2 billion raised via crowdfunding, with Asia raising $10.54 billion and Europe $6.48 billion.
In short, crowdfunding is a big deal, and it’s only gaining in popularity with each passing year. The number of crowdfunding platforms available in North America numbers close to 400, with almost half a million projects launched via Kickstarter as of October 2018.
It started with the JOBS Act
The introduction of the groundbreaking Jumpstart Our Business Startups (JOBS) Act that came into effect in 2012 was a game changer.
This law created an opportunity to market private investments to the public for the very first time, providing companies with the opportunity to reach a brand-new class of investors for their projects.
Before the JOBS Act came into play the only way for potential individual investors could get involved in institutional-quality real estate was through real estate investments trusts or private equity funds.
Those methods brought with them certain conditions and limitations that acted as barriers for many individuals, including cost-prohibitive minimum investment levels and a lack of real transparency.
Crowdfunding for real estate
Although still a developing industry when it comes to real estate, crowdfunding has broken down many barriers for individual investors, although in many cases investors must be accredited, with an income of $200,000 required as well as minimum investment levels a prerequisite.
Crowdfunding for real estate still has its challenges, which primarily come in the form of scams and bad actors. By no means is such negative aspects limited to the real estate industry, but it’s a problem nonetheless.
Misleading offers of unrealistic returns, as well as marketing intended to target the more vulnerable investors have plagued the crowdfunding scene within real estate.
Is Blockchain the answer?
For many people, blockchain is intrinsically tied to cryptocurrency such as Bitcoin , but in reality, that isn’t the case. The technology that runs the cryptocurrency industry can be applied to a whole host of different use cases.
Real estate is one of them.
One example can be found in the Estonia-based B11G project, that offers investors the opportunity to become involved via an Initial Loan Procurement model, which is a revolutionary blockchain-based fundraising mechanism that uses blockchains immutable qualities to provide a transparent and safe method for crowdfunding investment opportunities within the real estate space.
Crowdfunding as a method to raise capital within the real estate industry is just the beginning. Implementation of blockchain technology can take it to a whole new level.
Disclaimer: The content of this article is sponsored and does not represent the opinions of Finance Magnates.
