The term “crowdfunding” did not exist in the American vocabulary prior to 2011. Over its first five years in existence, $34 billion in contributions has been reached, carving out a whole new industry-driven 100% by investors presented with the opportunity to rethink the lending industry. Additionally, crowdfunding for real estate has emerged as one of the hottest investing categories.
Where did it come from?
You probably don’t realize it, but you have been “crowdfunding” for years. Remember each time you were with a group of friends enjoying a meal in a restaurant? At the end of the enjoyable dinner, everyone chipped in his or her portion of the bill to cover the full expense. That was crowdfunding.
Where did this new industry come from?
It came out of a loophole in new legislation. In 2011, Congress passed the JOBS Act during the economic recession to assist small business owners in creating jobs and fueling economic growth. Real estate investing, trust deed investing and fractionalized investment opportunities have been around since the beginning of mortgages. However, those options either were limited to Accredited Investors, due to being regulated as a security, or it was illegal to market or advertise investments of these types. The loophole in the JOBS Act made it possible for alternative real estate investments to be openly marketed and advertised to investors. This provided the caveat needed to allow companies to build and advertise that an investor could now function as a lender and earn a return on capital lent. Crowdfunding would pave the way for individual investors to invest in real estate for as little as a couple thousand dollars.
Before it was cool – Crowdfunding with Ignite Funding
Ignite Funding has been in real estate crowdfunding since before it was cool. We have been providing an alternative real estate investment option since 1995. Similar to crowdfunding real estate websites and platforms, Ignite Funding provides investors the ability to use their capital to invest in real estate and earn a double-digit return without the traditional “work” real estate investing requires. By combining capital amounts, investors can partake in larger projects for which they would not have been eligible previously. For example, at Ignite Funding the minimum investment amount is $10,000. However, the average project amount is $500,000. Minimal investors have the bandwidth or capability to be a solo investor on $500,000; however, any size group between one and 50 investors can be jointly invested on a project. Ignite Funding utilizes First Trust Deeds as the mechanism in the transaction allowing collateralized real assets to support the investment, while most crowdfunding real estate platforms provide the investor a share of the investment value not usually supported with collateral. Collateral plays a necessary role in a real estate investment should a default occur; risk is mitigated if the underwriting of the collateral is effectively conducted and held to high standards.
To learn more about crowdfunding and how Ignite Funding has used it to help investors earn 10 to 12 percent in annualized returns, visit our website or book a consultation at your earliest convenience.