Crowdfunding for Real Estate – read on….

I am all about innovation and positive change.  When I heard that crowdfunding has made its way into the Real Estate market – I thought I’d have a look.  Read this article I found about a local company – RealtyShares…

RealtyShares Gets $10M From Menlo To Grow Its Platform For Crowdfunding Real Estate Projects

Sort of like a “LendingClub for real estate,” RealtyShares has taken the idea of crowdfunding and applied it to the real estate market. After about a year of operations in which it was able to show product-market fit, the company has raised $10 million in funding from Menlo Ventures to quickly grow the number of projects made available to investors.

Unlike some other crowdfunding platforms, RealtyShares isn’t aimed at the consumer market. Like AngelList, it is focused fully on helping accredited investors easily find opportunities for investment. Its main goal is to reduce the friction between project sponsors and real estate developers looking for capital and investors who are looking to diversify their portfolios.

RealtyShares accomplishes this by doing the actual work of underwriting opportunities for outside investors, and allowing them to invest as little as $5,000 into any individual project. As a result, it can give them access to projects that were either too small or too difficult to underwrite themselves.

For real estate developers, meanwhile, RealtyShare’s model helps them get access to capital much faster than if they were to turn to a bank or other lender to fund a project. Projects on average are fully funded within four days of being put on the RealtyShares platform.

Since being founded, it’s funded hundreds of residential and commercial properties worth more than $300 million. More importantly for investors, it’s already returned some of their capital, enabling them to re-invest in its platform. RealtyShares founder and CEO Nav Athwal tells me that investments on the platform have paid back $2 million in capital so far, though it’s early days.

Returns vary by project, based on the type of deal (commercial versus residential), as well as risk profile and whether they are debt or equity deals. But they can range from 8 percent to 20 percent, which generally outperforms most other investment opportunities available.

RealtyShares has been growing quickly, as it increases the number of projects that investors can put money into. Just over the last few months, it’s seen both the number of deals available and dollar value of investments made on its platform double month-over-month. Part of that growth has just come from having a bigger pipeline of deals come its way.

Athwal says the company is receiving about 1,000 applications a month from borrowers, which is up from about 300 at the end of 2014. It then does the work of narrowing down which projects it makes available to potential investors. According to Athwal, in March investors on its platform funded about 15 deals to the tune of $7 million.

But there’s a lot more deals it could make available, if it had the ability to underwrite its projects more efficiently. That’s where the most recent funding comes in. With it, RealtyShares will invest in hiring more people and streamlining its internal processes in an effort to more quickly vet applications that come its way.

Today it’s announcing a $10 million Series A round of financing led by Menlo Ventures, which also includes participation from previous investor General Catalyst. Along with the funding, Menlo Ventures general partner John Jarve will join the board.

According to Athwal, part of the reason RealtyShares decided to go with Menlo was the firm’s investment in and Jarve’s participation on the board of Betterment. He believes that experience will be useful in helping to grow his platform for real estate investment.

With the newfound cash, Athwal says RealtyShares will be looking to bring on more underwriters to handle the increasing volume of applications coming its way.

The company will also be investing in automating its internal processes for reviewing applications. Athwal believes that such automation will enable RealtyShares to more efficiently screen out projects which aren’t the best fit for the platform, thereby giving its underwriters the ability to focus on more qualified applications and project leads. Either way, the goal is to keep the quality of projects listed high, so that investors can keep investing with confidence.

DISCLAIMER – The Caton Team does not endorse this company or product – all blog content is for your enjoyment.  Please contact your CPA for financial guidance.  

I read this article at: http://techcrunch.com/2015/04/07/realtyshares-gets-10m-from-menlo-to-grow-its-platform-for-crowdfunding-real-estate-projects/

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at: Info@TheCatonTeam.com

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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

PURCHASING REAL ESTATE THROUGH YOUR IRA

Investing with your IRA – has been a hot topic I have been looking into for years.  This article, by RealtyShares is a starting point.  If you are curious on how to invest with your IRA – contact your financial consultant.  

PURCHASING REAL ESTATE THROUGH YOUR IRA

Real Estate is a true way to diversify and provides investors a more tangible alternative to the volatile stock market and the low-yield bond market. However, the fact remains that investors can’t access nontraditional assets like real estate through a traditional 401(k) or IRA. Rather, these investors, in order to take advantage of tax deferred returns, must invest exclusively in publicly traded securities like stocks and bonds.

Interestingly enough, real estate has been available to invest in using IRA’s, specifically Self-Directed IRA’s, under a little known IRS Code 4975. A Self-Directed IRA is an IRA like any other under IRS Publication 590 in terms of annual contributions, required minimum distributions, and types such as Traditional, ROTH, SEP, Simple 401K, Health Savings Account and Coverdell Education Accounts. However, it differs from a traditional IRA or 401(k) under IRS Code 4975, in that it allows one to invest in almost anything with the exclusion of life insurance, collectibles and S-corps.

The types of real estate assets that an investor can invest in using their Self-Directed IRA is quite broad and includes:

  • Residential or commercial real estate
  • Unimproved land
  • Rental houses
  • Multiple-occupant dwellings
  • Office buildings
  • Foreclosed properties
  • Deeds and mortgages
  • Crowdfunded Real Estate

The most important aspect of using Self-Directed IRA’s is understanding Prohibited Transactions. A Prohibited Transaction is the buying, selling, leasing, using, having any benefit or receiving compensation, directly or indirectly with a Prohibited Person, which is basically immediate family and lineal and a lineal descendants. In other words, one cannot invest in vacation property and vacation there, nor can they buy a condo for their parents to retire in, even if they rent it to them at market rates.

This post was written with the assistance of James A. Jones of Kingdom Trust Co. James is a national speaker and educator, and the most published author with 6 books in the Self-Directed IRA industry. He is also the Founder and CEO of the Self-Directed IRA Investment Institute and Vice President of Business Development for Kingdom Trust Co. He has pioneered the use of self-directed IRA’s in the Crowd funding space, and serves on the Board and Co-Chair of the Investor Committee for the Crowd funding Intermediary Regulatory Advocacy Group.

DISCLAIMER – The Caton Team does not endorse this company or product – all blog content is for your enjoyment.  Please contact your CPA for financial guidance.  

I read this article at: https://www.realtyshares.com/blog/purchasing-real-estate-through-your-ira

Remember to follow our Blog at: https://therealestatebeat.wordpress.com/

Got Questions? – The Caton Team is here to help.  

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522

Want Real Estate Info on the Go? Download our FREE Real Estate App:  http://thecatonteam.com/mobileapp

Visit our Website at:   http://thecatonteam.com/

VISIT OUR INSTAGRAM PAGE: http://instagram.com/thecatonteam

Visit us on Facebook:   http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

Yelp us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or Yelp me: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Connect with us professionally at LinkedIn: http://www.linkedin.com/profile/view?id=6588013&trk=tab_pro

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008