Real Estate Crowdfunding & Investing

RealCrowd Features: 

  • Minimum Investment:  $25,000
  • Account Fees:  None
  • Time Commitment:  36 Months
  • Accreditation Required:  Y
  • Private REIT:  X
  • Offering Types:  Debt, Equity, Preferred Equity, Direct Ownership
  • Property Types:  Commercial, Residential, Single Family, Foreign Investors
  • Regions Served:  50 States
  • Secondary Market:  X
  • Self-Directed IRA:  Y
  • 1031 Exchange:  Y
  • Pre-vetted:  Y
  • Pre-funded:  X

RealCrowd Overview

RealCrowd is a real estate crowdfunding platform that was started by real estate experts from around the world. They aim to empower individuals through real estate investments using methods and be viewed as the most efficient and effective manner to invest in commercial real estate that is professionally managed.

RealCrowd is an estate crowdfunding platform that connects real estate developers to possible investors Where it differs from its competitors is that rather than acting as a market place and asset managers, RealCrowd focuses solely on being a marketplace. By doing this, its clients benefit in two ways:

  1. Platform fees – investors do not have to pay any fees to RealCrowd
  2. Once the client invests, RealCrowd does not involve itself in any interactions between investors and sponsors, so if RealCrowd were to close its virtual doors, there would be little to no impact on the investments made on its platform.

The Founders of RealCrowd

  • Adam Hooper- CEO & Founder

Adam is the founder of brokerage platforms with a national footprint. He was also responsible for over $1 billion worth of transactions in real estate. Adam concluded that the real estate industry was highly inefficient and in desperate need of a thorough tech overhaul. In his duties as the CEO of RealCrowd, Adam is responsible for the platform maintaining its position as one of the industry leaders.

  • Andy Noborg – CTO & Founder

Andy spent the majority of his career building an enviable record for creating secure and user-friendly software solutions used by several government agencies and large companies. Andy’s experience as a full-stack engineer at RealCrowd is invaluable when it comes to ensuring that the platform provides its users with a safe, intuitive, and enjoyable experience.

  • JD Conley – Founder

JD was a vital member of a tech team, funded by venture capitalists, who managed to develop five social games that attracted over 100 million users in a single year. JD has a hand in several key areas at RealCrowd, including developing business plans, writing code, or strategizing server infrastructure.

RealCrowd’s Operating Model 

The process of investing in real estate with RealCrowd is refreshingly simple.

  1. The investor sets up an account
  2. Investors provide their credentials to prove they are accredited
  3. Finally, the investors can now start to review the deals available on the RealCrowd platform

RealCrowd conducts in-depth background checks on potential borrowers. The verification process includes that its investors have the required experience as an operator for their proposed project. However, RealCrowd has made a point of making it known that they are not experts on every class of products in the United States, so their process of vetting deals might not be as detailed as some of the other real estate crowdfunding platforms out there.

RealCrowd does not charge any fees as they make their money via payments from sponsors and funding deals, meaning that they have no real exposure to the deals. This is an indirect comparison to the competition that links compensation directly to returns as a way to ensure sponsors scrutinize deals thoroughly. So, it’s fair to say that how RealMarket makes their money may not always be aligned with the expectations of investors

What is the minimum investment required by RealCrowd? 

The RealCrowd marketplace focuses more on individual deals and does not have an official minimum investment amount, leaving it up to the deal sponsors. However, the average figure for deals on their platform is $25,000. With project diversity varying significantly, it is up to the investor to decide if a deal meets your investment needs.

What are RealCrowd’s fees?

Since RealCrowd focuses solely on being a marketplace and isn’t involved in any aspect of asset management, investors don’t pay direct fees. However, RealCrowd does charge sponsors a fee for listing approved deals on the platform. By not having to pay RealCrowd any fees, investors are saved from being double charged on fees that they might have otherwise have been expected to cover on both the platform and the property operating level.

Sponsors are also responsible for paying what RealCrowd calls a “per-investor processing fee.” The fee amount depends on the minimum investment amount of a deal. Thankfully, RealCrowd has not tried to hide these costs and they can be found under the “Fees” tab on the “Financials” section of each deal page.

RealCrowd promotes its platform as being fee-free with its incentives being highly dependent on the volume of deals on its platform. The upside of this is that there’s no real risk if any deal on their marketplace ends up losing money.

What information is given about the deals on the RealCrowd platform?

There are usually between 6 and 14 deals seeking funding on the RealCrowd platform. Potential inventors can expect to find information on the following for each of the approved deals they find on the platform:

  • Financials
  • Sponsor info (including their track record, background, and experience)
  • Offering documents
  • Project projections
  • Operation plans

Most sponsors also include a live web session where investors are free to ask any questions or raise concerns they may have concerning the project.

Can you sell your RealCrowd investments?

Unfortunately, there is no secondary market for RealCrowd investments. Once you invest, you are in it for the long run.

RealCrowdWebsite

One area where RealCrowd stands is out is with its website, especially when it comes to the structure of its deal pages.  You will find all the important information on each deal clearly and neatly set out under various tabs. While the same can be said about the websites of almost all real estate crowdfunding platforms, the RealCrowd website is highly detailed, yet it remains intuitive and very easy to navigate and find exactly what you are looking for. Another great feature of the site is how easy it is to get in contact and communicate with the sponsors.

Next, we have to mention the fantastic investor dashboard. Using this tool, investors can get up-to-the-minute info on all of the investments made on the platform, along with sponsor updates, all of the needed tax documents, performance metrics, and more.

RealCrowd.com has an impressive education archive for investors. In the archive investors can broaden their real estate investment knowledge with:

  • A short real estate investing course
  • Over 60 podcast episodes, which are added to regularly
  • Access to the RealCrowd customer service team that can be contacted via email and phone
  • The dashboard also provides support for self-directed IRA and solo 401k account. However, since each investor can choose whether they will accept funds from those types of sources for each deal, there is no guarantee that investors will be able to use those types of accounts to fund their investments

Customer Service at RealCrowd

You can contact the customer care team via phone or email

Phone – 800-286-1602

Email – info@realcrowd.com

Real Crowd Registration and Conditions for Investors

Investing on the RealCrowd platform is only open to accredited investors, meaning you must meet at least one of the two following requirements:

  • An individual net worth (or joint net worth with a spouse) exceeding $1 million (not including the net equity in your primary residence as part of the $1 million).
  • An individual income of more than $200,000 in each of the two most recent years or a joint income with a spouse exceeding $300,000 in those years. You must also have a reasonable expectation of reaching the same income level in the current year.

RealCrowd focuses on providing deals from the bigger commercial real estate sponsors with a strict minimum of 10 years of principal operating experience and $50 million of verified transaction experience. Once checking those boxes, sponsors are further scrutinized, including independent background and experience verification.

Is It Safe to Invest With Real Crowd?

RealCrowd is best suited to those investors who are accredited and are up to the task of doing their due diligence. While the platform does a thorough background check on sponsors for each deal, the platform has a conflict of interest policy that bars management and employees from investing in any deals and RealCrowd is strictly a marketplace that connects sponsors and investors.

In a worst-case scenario, an investor can find themselves investing in a project that fails because the platform goes bankrupt. Thankfully, that is not an issue with RealCrowd since investors invest directly with sponsors and RealCrowd simply provides the platform and tech for both sides to connect. Since RealCrowd doesn’t manage or sell any properties, if the platform were to go belly up, it would not affect the deal. At most, it could delay acquiring necessary tax documents.

RealCrowd boasts a robust financial profile, is free of debt, has a positive cash flow, and does not foresee the need to raise additional capital to keep the platform operating. Based on figures provided by Crunchbase, the platform has raised over $1.7 million after two seed rounds; one in 2013 and the other in 2014. Since then, RealCrowd reports raising over $4.4 million.

Should You Invest With Real Crowd

As of 2020, RealCrowd is one of the most well-known and popular crowdfunding platforms for real estate. Their major focus is listing projects by some of the biggest commercial real estate sponsors with over a decade of principal operating experience and verified transactions worth over $50 million. It’s only after meeting those initial criteria that each sponsor undergoes independent and experience checks.

RealCrowd is known for its no-fee style of operating, with investors paying zero fees to invest in their platform. However, sponsors do pay what has been termed a “project listing fee.” There is also an additional surcharge for every investor that joins a listed project. Some do feel how RealCrowd makes their money causes a conflict of interest since they make money for listing deals on their platform and for every investment made. This could cause a conflict between the number of people involved in a deal and rejecting sponsors.

Advantages to using the RealCrowd Platform:

  • Variety with RealCrowd – you have a broad selection of funds and of individual property deals to choose from, including, commercial assets, industrial, retail, office, and multifamily
  • Experienced sponsors – all sponsors on the RealCrowd platform have a minimum of 10 years experience on a principal level, along with principal transactional experience of at least $50 million
  • Direct investing – investors invest directly with sponsors, with RealCrowd stepping out of the way and encouraging the two parties to communicate with each other
  • Nationwide investments – with RealCrowd, you have access to deals across all 50 states, making it perfect for those wishing to diversify their investment portfolios
  • Transparency – with the RealCrowd platform, users can expect a high degree of transparency and due diligence on every listed deal, along with a detailed history of every sponsor
  • IRA investments – with RealCrowd making investing using funds from an IRA (SDIRA) a really simple process
  • Leadership – RealCrowd was started by experienced real estate professionals who linked up with tech experts. With other real estate crowdfunded platforms, it is the other way around

Disadvantages to using the RealCrowd Platform:

  • High minimum investment: the majority of deals have a minimum investment of $25,000.
  • No secondary market – this means that once you invest, you’re in it for the length of the deal
  • Accredited investors only –  RealCrowd only allows accredited investors to invest in the deals found on their platform
  • No pre-funding – sponsors may be forced to wait up to 60 days before things get moving

Conclusion

There is no wonder RealCrowd is so popular since it has so much to offer – no investor fees, how easy they make the process of investing, and the high level of transparency they offer. However, it’s not for everyone. After all, they do charge a sponsor fee, users are expected to do their own due diligence, only accredited investors are allowed, and your investment cannot be sold on the secondary market. If you are happy with the above, we heartily recommend you give them a go.