Crowdfunding Finds a Home in Real Estate

April 30, 2014

With crowdfunding tech sites such as Kickstarter and Indiegogo successfully launching projects ranging from LPs to lightbulbs, the idea is making inroads in real estate.

Groundfloor, an online crowdfunding program devoted to real estate, is putting a historic Atlanta home on the market this week as it prepares to expand its funding platform to five new states.

The home renovator received $40,000 in funding from 39 independent investors in Georgia, who'll be paid back with 8 percent interest in six months.

Crowdfunding platforms pull together small amounts of money from many individuals and pool the money to fund projects ranging from product development to charitable works. About 20 crowdfunding platforms are operating in real estate, but Groundfloor is unique in that it works within state laws to operate on a more local basis. National real estate crowdfunding investment sites are awaiting rules from the Securities and Exchange Commission to allow nonaccredited investors to participate in crowdfunding.

Meanwhile, while Groundfloor launched in Georgia, it opens this week in five more states -- Arizona, Illinois, Massachusetts, Pennsylvania, and Virginia -- where regulators have authorized the company's plans to solicit state residents.

Groundfloor's terms allow investments from $100 to $2,000, and terms range from six months to several years. Founder Brian Daily believes that will prove attractive to small investors. "This is a steady, tangible way for ordinary people to make good returns on their money, a new class of product that didn't exist yesterday," he told USA Today.

Source: "Groundfloor stretches crowd-funding's limits," USA Today (April 28, 2014)

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