Is Crowdfunding The Best Commercial Real Estate Capital Solution For You?

The traditional process of real estate financing was drawn out, tedious and often lead to missed opportunities. Institutional banks and hard money lenders only give loans to the most creditworthy Sponsors with extensive track records. Crowdfunding arose as a solution to these hidebound resources and with the wisdom of the crowds behind the marketplace, genuinely innovating investments could be crafted.

The Truths Behind Crowdsourcing Technologies

The not-so-far-fetched science-fiction series, Wisdom of the Crowd exploits the most sensational benefits of real-time crowdsourcing platforms like RealtyeVest and draws parallels to the ridiculous, cringe-worthy fantasy world of The Circle, starring Tom Hanks and Emma Watson.  In an industry like online real estate crowdfunding, where privacy can cost thousands upon thousands of dollars, the notion of people willingly relinquishing their data to go wild goose chasing and risking their lives seems contradictory of the ongoing battle for online privacy battles fought by men like Edward Snowden and backed by the majority of the nation. (And, frankly, the idea sounds a bit reminiscent of a little 2016 fad known as Pokémon Go, which seemingly dropped off the face of the earth as quickly as it appeared.)

Raising capital: Old school vs New school

“Dialing for dollars,” a phrase used by real estate investment firms trying to get capital raised for their deals. It usually lasts from opening to the close of business every day, and would go on until the deal closed. That’s how it was done in the 20th century. Old school. In the 21st, where technology is a driving force, it’s all about making things easier, and that includes raising capital.

Real estate investment firms all over the country are acquiring properties and turning them into profit. However, this is no easy feat. A lot goes into raising capital for a deal. Today, real estate sponsors will target an acquisition. Once the firm comes across an acquisition, a Letter of Intent (LOI) is drawn up, which is an agreement between the sponsor and the seller outlining the price and terms. Once the LOI, and subsequently the Purchase and Sales Agreement (PSA) is signed, the process to raise capital begins.

First things first, a Private Placement Memorandum (PPM) is drafted by legal counsel which normally will take a month and $10,000-$20,000. This is followed by dialing for dollars.

To get started, one maybe two people with the firm sit down and look over an existing investor list and make warm-calls to investors advising them of a new opportunity. These firms in most cases, have a Reg D 506(b) exemption, which prohibits general solicitation of the real estate offering, and is only offered to friends, family and “existing” clients.

Not being able to reach out to new investors means relying on their existing network to support the project, which slows the success rate considerably. The firms can not advertise under the exemption, making it incredibly difficult to get the word out about a project.

Then, once these firms start to receive investments, managing investors and making distributions to investors or entire entities in multiple places is another ordeal.

It’s a long drawn out process just to get even a percentage of the funds raised for a new project, that in many cases result in success, but are costly and time-consuming. Fortunately, technological advances have served as a catalyst to launch a once formidable task into effortless achievement.

Step into the new school, now real estate firms have the option to manage their fundraising efforts from one location. Online platforms and accompanying software help sponsors manage investors and use promotional tools that will streamline a faster more consistent capital-raising process.

Sponsors who are formidably exhausted by the idea of “dialing for dollars” now have significant capabilities such as managing investor information, and sending documents electronically that allow for e-signatures. This eliminates the need to make constant phone calls and sending documents via snail mail. Contemporary methods of raising capital now include the use of accessible software that eliminates the need for sponsors to have to send documents and distributions to multiple places.

Additionally, modern technology allows for easier and faster communication. Sponsors can now issue correspondence and updates and communicate with investors via email and chat.

Keeping in mind that to be able to take full advantage of the software capabilities, sponsors need to be able to get new investors on board. That’s when promotional tools become an invaluable part of the process, as sponsors now have the ability to use a variety of multimedia applications to engage existing and prospective investors. Digital marketing now plays a huge roll in disseminating real-time data instantly to tens of thousands of investors with the click of a button.

Video, imagery, webinars, podcasts and the ability to share these things on social media are not only changing the way sponsors generate buzz about their projects with the goal of securing investment funds, but it’s also an extension of branding sponsors can take full advantage of.

In the past, much of the rate of success depended on the managing of many aspects of bringing a project to fruition. Now, sponsors can decide on one platform and utilize several digital marketing strategies and high level analytical tools to gauge investor’s interest in singular deals. This in turn, enables the sponsor to create better targeting and segmentation through email, syndication, and content marketing. Essentially, sponsors now have the option to build upon those old school practices by using available technology to improve their capital raising methods.

Click the following link to learn more about utilizing a commercial real estate investing platform.

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RealtyeVest Marketplace For Sponsors

Jacksonville, FLA (September 29, 2017) ― It started as a simple thought. How can we interface with sponsors and utilize our crowd-sourcing technology? The solution, a new means to give sponsors an advantage over companies still using traditional methods. The RealtyeVest Marketplace is shifting the way sponsors raise capital with a simple integration of their methods and our technology.

Raising capital is now easier than ever. RealtyeVest marketplace supplies sponsors with both a stage to present their projects and the technology to aid in expediting acquisitions, achieved with an all-encompassing technology resource that manages the entire capital raising process.

Using traditional capital raising methods can be daunting. The rate at which sponsors can successfully raise capital and close the deal on a project can be considerably slow. Furthermore, paying out large groups of investors can be complicated, particularly when they’re coming from multiple entities. Lastly, sending documents to numerous investors can be tedious and can possibly become quite costly. These hurtles typically are cumbersome and expensive.

With RealtyeVest Marketplace, sponsors can use the company’s 506(c) exemption which allows investors to register and pledge same-day. This acts as a place-holder until accredited. Once potential investors go through our seamless accreditation process and are approved, they may then fund their investment into the sponsors escrow account. Most real estate companies have a 506(b) exemption, limiting the number of non-accredited investors to 35. Real estate companies can use either RealtyeVest’s 506(c) exemption or the 506(b) which offers a greater pool of non-accredited investors.

The RealtyeVest Marketplace also supplies various tools for sponsors such as the capability to include imagery, videos, webinars, and other promotional means to showcase their uniqueness. The platform not only comes with a designed landing page, but it also includes syndication, and the use of technology to better leverage the sponsor’s existing group of investors while also exposing them to new investors.

Sponsors have access to custom CRM tools for better investor management and communication through features like chat and email protocols. A Sponsor Dashboard is also featured within the Marketplace and includes many capabilities that facilitate document management, payouts, task confirmations, real-time data, and investor enrollment in one location. This subsequently results in lower overhead and faster closings.

In summation, RealtyeVest Marketplace is replacing the traditional capital raising methods with streamline technology along with drastically reducing fees and overhead.

All of these benefits are meant to simplify the capital raising process for all parties involved. More information about the Marketplace can be viewed on here.

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Real Estate Crowdfunding 101: Interview with Dan Summers, CEO of RealtyeVest

Last week Dan Summers, CEO of RealtyeVest, sat down with OakPeak Equity, an investing and management company, to talk about Real Estate Crowdfunding. The interview details the thought behind creating RealtyeVest, and why it’s a good idea to merge real estate with investing. Take a look at the interview below to get some insight on a fairly new industry that’s about to shake up the investment world:

AN INTERVIEW WITH THE CEO OF RealtyeVest – Dan Summers

SEPT 26th 2017

Good morning! As part of my ongoing efforts to provide Oakpeak Newsletter readers with unique insights into the real estate industry, I will periodically interview executives at some of the emerging real estate crowdfunding companies as well as real estate private equity firms. We at Oakpeak are kicking off the ‘Interview the Executive’ series with an interview with the CEO (Daniel Summers) of a fast growing Real Estate Crowdfunding firm RealtyeVest based out of Jacksonville, Florida. If interested, you can also review RealtyeVest’s latest San Antonio, Texas based multifamily offering here.  I kicked off my interview with Dan Summers by asking him to give Oakpeak Newsletter readers an overview of RealtyeVest…

Question I: What is RealtyeVest and how does it differ from the multitude of real estate crowdfunding firms that have mushroomed over the last few years?

RealtyeVest CEO Dan Summers: RealtyeVest is a real estate company first and a technology company second. That’s our biggest distinguishing factor. I’ve personally owned and developed well over $1B in multifamily, office, retail and flex-office. My resume in this industry stands shoulders above any in the crowdfunding space. We also invest in every single deal on my site. No one else can make that claim. Our future is to stay nimble and cutting edge. We want to continue to marry technology with real estate investing. For instance, introducing a one-stop seamless process for IRA’s to invest on our site. We’re working with one of the largest custodians right now to make that happen. What was once a 7-10 day process will soon be a 24 hour process.

Question II: Can you talk a little bit about yourself and your background?  What was the catalyst behind launching RealtyeVest?

RealtyeVest CEO Dan Summers: I have been in the real estate industry nearly 40 years. There isn’t much I haven’t seen or done. I’ve ridden every peak and valley. I’ve touched every aspect from Brokerage to Development to over $1B in acquisitions. I’ve officed in Chicago, Houston, San Antonio, Pittsburgh and now Jacksonville. I started a 1 man company and grew it to 147 full time paychecks, rolled out its IPO within 10 years and retired at the ripe age of 47. Started another acquisition company in 2013 with several Goldman Sachs ex-pats out of Singapore. We bought multifamily in markets with a story. RealtyeVest was my answer to 30 years of expensive PPM’s, a limited capital audience and laborious SEC reporting. When the solicitation floodgates opened in 2012 as a result of the JOBS Act, I took immediate note and tracked the competition for 12 months. I was amazed at the imbalance between seasoned real estate experts and digital marketing millennials. My peers were reluctant to enter the technology world but the millennials jumped in with both feet. That was the beginning of what is now RealtyeVest. I rebuilt my underwriting team and hired the most talented digital marketers available in NE FL. I’ve built a company once again from scratch but this time with a wide open playing field and limited competition.

Question III: Which among the following real estate asset categories: (multifamily, healthcare, student housing, office buildings and retail) do you consider to be relatively “safe” especially for the individual investors who often participate in crowdfunding deals? Which are the markets (from a geographic perspective) that you are bullish on?

RealtyeVest CEO Dan Summers: No doubt Senior Housing. With 4,000 Baby Boomers turning 85 every day together with an additional 12,000 retiring daily, this asset class has the most staying power. This is an undeniable demographic that can’t be argued.  Couple the demand with supply or actually a lack thereof and you get a perfect storm. Blend in some nuances like retirees payments are normally secured by insurance, the government and/or an estate lends a heightened level of security to your investment.

Question IV: Where do you think we are in the real estate economic cycle (close to the peak or just mid-way there)?

RealtyeVest CEO Dan Summers: The light in my crystal ball went out ages ago but one thing I can attest to is real estate has no plateaus. It’s either up or down. Nothing in between. The question is…. when is that “Tipping Point”. When does Expansion turn into Over-Supply? The 2 benchmarks when determining where you are in this particular Market Cycle are Vacancy and Construction. Keep your eye on the GDP, rental rates and occupancy. With a strong GDP, job growth ticks up resulting in higher occupancies creating higher rates and eventually creating a need “or” opportunity for new construction. I think this where we are now but once again watch for the next “Tipping Point” when supply and demand meet. Vacancy starts inching up and while rent growth may remain it retreats a bit casting a decrease in overall revenues.

Question V: Finally, What are your thoughts regarding the future of Real Estate Crowdfunding?

RealtyeVest CEO Dan Summers: The real estate industry in large has long been overdue for a disruption. When you consider how archaic the traditional lending platforms are along with the minuscule returns investors are receiving from institutions, IRA’s and 401K’s, it’s no wonder why the real estate crowdfunding industry is expected to generate nearly $150B in managed asset within the next 5 years. Technology continues to upgrade the experience investors realize making the process seamless and transparent. There are 8.5M accredited investors in the US and less than 1% are actual investors on crowdfunding sites. This together with the Trillions of dollars in IRA’s and less than 3% are self-directed. Crowdfunding will mature into a sophisticated investing platform that will outpace Wall Street within 10 years.

(This interview was conducted by OakPeak Equity staff, and was published in their newsletter.)

 

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Why Assisted Living Facilities Are the Best Real Estate Investments of 2017

As national demographics shift and Americans between 50 and 90 years of age grow in larger numbers than our country has faced, the real estate market is experiencing a lateral evolution.  According to AARP, there is a rising 77 million baby boomers currently in the US, with 10,000 new people reaching retirement age each day until the 2030s. Per these stats, the need for credible, long-term support is rapidly sprouting into one of our nation’s greatest social and economic demands.

So goes a golden gap for capitalists looking for new entries into a flourishing investment market: assisted living facilities.

An assisted living facility is a care-based residential property where seniors can maintain independence while getting support from a licensed staff. In contrast to the traditional nursing home, assisted living facilities are communities for those who do not need constant supervision but can benefit from a daily support system to help with tasks such as meal preparation and medication regulation.

The Assisted Living Federation of America details that at the cynosure of senior care in assisted living centers should be independence, quality of life, dignity and personal choice, making this a core real estate group for the growing retirement demographic that will be virtually unaffected by seasonal market fluctuations.

Parallel to the demographic demand shift in recent decades, global business has been revolutionized by a technological boom that has eclipsed every industry. In a world where people can you send messages through space with the stroke of a finger, it is easier and faster than ever to diversify business and investment opportunities.

Of such methods enhanced by the ease of technology is real estate crowdfunding platforms; the process of raising money through a collective effort for a single purpose or project. With Realtyevest, accredited investors anywhere can enter the real estate market with ease while alleviating many of the risks associated with traditional investments.

Furthermore, included on our site is a bank of opportunities to make a fruitful and informed entry into the assisted living real estate space, with little to no experience or special insight. Our experts monitor trends and choose partners that offer the greatest benefit to our investment community. Then, we present a myriad of options through an interactive dashboard that allows everyone involved to track the progress of their investment. This is how solutions are created in the future and you can get started TODAY.

 

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Are You an Accredited Investor? Here’s How You Know.

As crowdfunding grants new entries to the market everyday, Realtyevest uses cutting edge technology to connect accredited investors with lucrative real estate deals throughout the nation. By definition, an accredited investor is a person or entity that is qualified by the SEC (Security & Exchange Commission) to make large-scale investments based on income or net worth. At Realtyevest, we go the distance to maintain a secure and transparent community of accredited investors through the most simple process possible.

Accredited Investor: A Profile

To qualify as an accredited investor, one of the following must be true:

  1. A person must have earned more than $200,000 (or $300,000+ joint income for married couples) for the past two years, with a projected third.

OR

  1. A person must have a net worth of at least $1 million (or joint net worth of $1 million for married couples), excluding his or her residential property value.  

To calculate your net worth, use the following formula.

Net Worth = Assets – Liabilities

Accredited Investors can also be entities (i.e. banks, partnerships, corporations, nonprofits, trusts, etc ). To qualify, each entity must:

  1. Have a trust comprised of at least $5 million

OR

  1. Be owned exclusively by a group of accredited investors

We’re honored to set the platform for informed investments that support the continued wealth and success of our partners. Click HERE to sign-up.

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