Recap: iGlobal Forum's Real Estate Crowdfunding Summit
**Had to repost this write-up, sorry for breaking any links!**
I was happy to see a real estate crowdfunding specific event make it to NYC this year with iGlobal Forum's Real Estate Crowdfunding Summit on November 5th. I think the trend is hotter than ever. It's been hot since Fundrise introduced us to the concept four years ago and since Lending Club and On Deck Capital went public recently. I do wish that the topics and conversation at this event were a little more advanced. We can't blame iGlobal Forum (follow them on Twitter @iglobalforum), they put on a great event. I think the problem stems more from the real estate and real estate investment communities. Every industry should be on top of new trends, no matter what. The marketplace lending and alternative finance sectors both know quite a bit about real estate financing already. It's now time for the real estate communities to step up their games and get on the leading edge of what's going on in their industries.
Below are some key quotes and ideas that I pulled out of the conversations. The biggest theme throughout the day was focused on due diligence. Platforms need to have a strict underwriting process, and Investors & Sponsors need to do their own due diligence on the platforms and the teams running the platforms.
Gabriel A. Pozo - Principle and Founder, Advalurem Group
"What made us enter the crowdfunding space was curiosity more than a strategic decision."
"Equity capital markets are inefficient, which means opportunity for crowdfunding."
Neil Adamson - SVP Finance & Acquisitions, ATCO Properties
"We entered into crowdfunding for bridge funding."
David Manheimer - Co-founder & Partner, Brooklyn Standard Properties
"We didn't have access to investors in Nebraska... now we have investors in Nebraska."
Shalin Sheth - Senior Associate, Second Century Ventures
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"It's still really early."
"A recent study showed that 82% of sponsors want to try crowdfunding."
Jilliene Helman - Founder & CEO, Realty Mogul
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Follow Realty Mogul on Twitter @realty_mogul
"My definition of crowdfunding is to pool capital on the internet."
"The exciting thing about crowdfunding is accessing the 8 million accredited investors on the internet."
"I travel a lot for work. When I'm in the airport, I ask the ticketing agents if they know what crowdfunding is."
"We have no interest in opening the Realty Mogul platform to non-accredited investors."
"We're not planning on building a secondary market."
Tore C. Steen - CEO & Co-founder, CrowdStreet
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Follow Crowdstreet on Twitter @CrowdStreet
"Don't look at crowdfunding as cheat money."
Dan Miller - Co-founder and President, Fundrise
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Follow Fundrise on Twitter @fundrise
"Crowdfunding is return to syndication."
"Crowdfunding is gonna eat at a lot of the fees that private equity charges today."
"Shorter term duration of 1-2 years sells much faster."
"We see this space going the way of Lending Club and Prosper--hundreds of thousands individual investors and a handful of institutional investors that account for most of the capital on the platform."
"The small investor can create much more value than just money."
Daniel Oschin - COO, Shopoff Realty Investments
"IRR's are useless. You can put any number on IRR."
"Crowdfunding seems to work better with shorter holds."
Jesse Stein - Founder & COO, ETRE Financial
"I think a secondary market will be very interesting for real estate crowdfunding."
"I think we're all here for the same thing. To open up real estate to a broader investor audience."
Justin Pierce - Founder & President, Snow Goode Homes
"Real estate crowdfunding gives people a chance to invest in something beyond Wall Street."
"Crowdfunding has the potential to be the most transparent."
Justin Pierce to Dan Miller
Justin Pierce: "What's to stop the investors from connecting with the sponsors offline--taking out the platform as the middle man?"
Dan Miller: "We encourage the sponsors to connect with the investors. We build a community through our website. We can't control what they do. We just need to make sure that we offer full service, due diligence and community."
Kim Wales - CEO, Wales Capital
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"Crowd Bureau will be the ratings system for the industry."
Michael Walsh - General Partner, Green Visor Capital
Follow Green Visor Capital on Twitter @GreenVisorCap
"People don't know foreign exchange, but FX Alliance is worth $1.5 billion. People know real estate, so this space has the potential to be huge."
"Developers can decrease fees with real estate crowdfunding."
"Investors are always looking for yields."
"You have to think of this company [Crowdstreet] as a technology company as well as a real estate company."
"I think the high yields will drive more investors over time."
Richard Tuley - CEO, Destiny Development
"From a philosophical point of view, I think the democratization of real estate investing is a great new asset class."
Kristen Young - Counsel, Sullivan & Worcester
Follow Sullivan and Worcester on Twitter @SullivanLaw
"I believe the rulings about what an accredited investor is will change. You may only need an MBA to become an accredited investor in the future."
Brian Korn - Attorney, Pepper Hamilton
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Follow Pepper Hamilton on Twitter @Pepper_Law
Brian Korn asked the panel:
Brian Korn: "Is over-disclosure a risk in this area?"
Harold Hofer: "No."
David Halabu: "No. Even if it costs a little bit extra."
Harold Hofer - Co-founder & CEO, Rich-Uncles
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Follow Rich-Uncles on Twitter @RichUncles
Nick Bhargava - Co-founder, Groundfloor
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"Making a platform that is as easy as putting stuff in your shopping cart could be a huge risk."
David Halabu - Founder & CEO, Yield Crowd
Follow Yield Crowd on Twitter @yieldcrowdâ
"There are a lot of good deals that should be available to the common investor but aren't... and those investors are stuck with taking risks on penny stocks."
