In the past few years, crowdfunding has become one of the most effective and popular ways for companies and individuals to raise capital over the Internet. In fact, since Congress passed Title II of the JOBS Act in September 2013, one of the industries that’s benefited the most from crowdfunding has been the real estate industry. These provisions, which allowed for debt and equity crowdfunding to become a legal and viable option, have spawned a new method for real estate investors and sponsors to raise capital for their projects, without having to rely on their local banks and hard money lenders for financing.
The genius of the real estate crowdfunding model is in its simplicity. Typically, in a real estate crowdfunding scenario, a developer of a property brings a deal to the table by submitting the details of their project to a platform. The project is then vetted by the platform to make sure the investment is a sound and lucrative venture. After the platform has conducted their due diligence they will then host the project on their site, giving investors the opportunity to contribute funds towards that particular loan. As the project moves towards completion, the Borrower pays down their loan with interest while the contributors receive dividend distributions as a return on their principal investment. The exit strategy for the Borrower depends on what type of project they’re working on. Regardless, the peer to peer lending process is fairly simple for all parties involved and everyone is able to benefit from the experience if all goes as planned.
Ultimately, Patch of Land’s real estate crowdfunding platform bridges the gap between traditional and hard money lenders by combining the best elements from each. This concept provides a fast and reliable solution for real estate investors looking to borrow funds and raise capital for their projects in an easy and repeatable way. Here are just some of the benefits of getting a peer to peer loan through Patch of Land:
- Access to Capital – Our large network (or “crowd”) of accredited investors provides you with a source of capital that never runs dry.
- Speed to Close – Our tech-enabled platform helps us work with a sense of urgency to approve and fund your loan in as little as 7 days.
- Prefunded Loans – After we’ve approved your loan, we will fund you at closing first, then offer your deal to the “crowd” second. This is opposed to traditional real estate crowdfunding platforms that make you wait until the “crowd” fully funds your loan before moving forward with your financing.
- Nationwide Reach – We operate in every state throughout the nation with exception to a select few.
- Brand Your Business – The projects hosted on our industry-leading platform are listed on CNBC’s Crowdfinance 50 Real Estate Average which means investors throughout the world will take notice and recognize your business.
- Easy to Repeat – Once we’ve worked with you in the past we’re able to close your loans even faster in the future.
For more information on how you can use real estate crowdfunding to finance your next project, visit Patch of Land. Our Lending Parameters, FREE Borrower Handbook, and Application Center will provide you with the educational resources you need to get started on financing your next short-term residential or commercial real estate loan today.