Crowdfunding – Old Dog New Tricks

By Will Heaton

It is not news that investing in real estate and investing in general is growing in popularity.

The draw of a big payday pulls people in, and the glitzy glamour of choosing cabinet finishes paints a rosy picture of real estate investing. Pin the latest DIY pallet and herringbone subway tile backsplash and bam, now you’re an investor. Crowdfunding allows anyone with internet access and a few spare dollars to invest in real estate.

One house flipper in Florida raised $1 million dollars in just 12 hours.

Why go to a bank? Why troll mortgage offices and private lenders when you can get access to the real thing, faster than you can get your triple grande no foam cappuccino?

Anonymous internet backers are raising the bar and opening their virtual wallets, funding deals through numerous platforms. Crowdfunding paves way for individuals to invest in and endless array of opportunities, supporting everything from creative home based projects to fundraising for shark cage adventures on extreme honeymoons. Now, you can open your web browser and search crowd funding and find a myriad of options just on page one alone.

So what’s the cost?

Well it depends on how you look at it. Many of these newer platforms are lending at around 14% annually, which may seem excessive to an average homebuyer. But, what’s more expensive than a missed opportunity? Absolutely nothing, unless it’s a faulty investment.

Whether you’re raising capital for real estate or to pay for your twin brother’s dog’s emergency liposuction, there are always going to be underlying investment risks. In real estate, these risks increase as information regarding the investment project decreases.

For example, who owns the property and can you verify it? Who’s going to be doing the work on the property you lent your hard earned money to? Do they really know if they will get more return on real hardwoods vs, laminate? Will the cherry finish they just had to have be neutral enough to attract a wider range of buyers? Did they notice that hairline fracture in the wall and how it extended down through the foundation? Will the agent they chose to represent the finished product be a stellar negotiator and get the most they possibly can for the property, in the quickest timeframe imaginable? So many questions, inevitably turning into a shaken mixed drink of possible answers and equations.

Two things we know for sure. Real Estate is always a good investment (if done correctly), because you always have the asset to fall back on.

As for the other thing, well, fast and easy isn’t always better … unless you have a team of seasoned professionals running the show.

Crowdfunding: a new method with the same old problems.

Are you seeking a loan for an investment property? Contact Carolyn Gossett at carolyn@intrustfunding.com or 425.999.5203 to inquire about our loan programs.

About the author …

Will Heaton is a co-founder and managing partner at Intrust Funding. As the fund manager, he is responsible for investor relations, underwriting, and new business development. Will has over 10 years of experience in multifamily and residential real estate. He is an enthusiastic member of the community and enjoys participating in various non-profit groups throughout King County. In his free time, Will enjoys adventures with his wife and their two children, classic cars, and fishing.

REAPS is the oldest – and largest – Professional Association for the real estate investor this side of the Mississippi.” We provide education and networking resources for real estate investors, those who want to be investors and anyone who provides value to our members. Our goals are to motivate and support our members and guests through education, discussion, legislative action and networking. We host over 40 live events a year around Puget Sound and they are all open to the public. If you’ve never attended one of our meetings, just email our office at info@reapsweb.com and be our guest.

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