Comments on: CrowdFunding for Real Estate Investing https://realtybiznews.com/crowdfunding-for-real-estate-investing/98724442/ With the latest on mortgages, refinancing, real estate & home tips Thu, 04 Sep 2014 01:58:19 +0000 hourly 1 http://wordpress.org/?v=4.0 By: Brian Kline https://realtybiznews.com/crowdfunding-for-real-estate-investing/98724442/#comment-263504 Thu, 17 Apr 2014 13:31:47 +0000 https://realtybiznews.com/?p=24442#comment-263504 Hi Dan,
Thanks for your comment. In my opinion, Kickstarter is more focused on the arts than on real estate. There are sites out there that specifically focus on crowdfunding real estate projects. However, Due Diligence is needed because this is a relatively new funding source. There are also many other sources for private funding. I don’t personally make recommendations because it could create a conflict of interest.
Brian Kline

]]> By: Dan https://realtybiznews.com/crowdfunding-for-real-estate-investing/98724442/#comment-263427 Wed, 16 Apr 2014 21:00:29 +0000 https://realtybiznews.com/?p=24442#comment-263427 I have been looking at ways to raise capital for a real estate investment for some time. What are your thoughts about using the current kickstarter.com and others out there to raise the capital for a crowdfunded real estate project? Do you think there is a site for this already out there I could use? Or that site is not built just yet?

Dan

]]> By: Brian Kline https://realtybiznews.com/crowdfunding-for-real-estate-investing/98724442/#comment-262991 Thu, 10 Apr 2014 17:27:21 +0000 https://realtybiznews.com/?p=24442#comment-262991 David,
Thanks for the well thought out response. Other readers will definitely benefit from your insight.
Brian Kline

]]> By: David C. Stiver MA (registered Investment Advisor) https://realtybiznews.com/crowdfunding-for-real-estate-investing/98724442/#comment-262916 Wed, 09 Apr 2014 22:52:08 +0000 https://realtybiznews.com/?p=24442#comment-262916 Okay, how about this idea?
1) Certificates of Participation: Individuals gather together funds which are loaned at a reasonable rate to an entity, such as a small business or an association. For example, many homeowner associations are required to have Reserve Fund Studies on a regular basis to insure that adequate funds are available for capital improvements. However, due to the low returns on Money Markets and CD’s many HOA’s are faced with little or no growth. As such, their Reserve Fund Study projections are flat and many Associations are falling behind as the result of Deferred Maintenance.
With a Certificate of Participation, the Associations are not engaging in equity shares. Under a Certificate of Participation the Association agrees to pay a fixed rate of return for borrowing the funds. Because of Crowd Funding, the funds are not FDIC insured and there is risk involved. However, very many banks are reluctant to issue Association Loans. Instead, they prefer that the HOA issue a Special Assessment and the owners obtain a Home Equity Line of Credit. This serves as collateral for the bank. In addition, the bank controls the terms of the loan etc. In addition, some banks are seeking to collateralize the properties contained with the HOA communities.
With Crowd Funding and Certificates of Participation, the HOA borrows at a fixed rate of return for a fixed period of time. The investors receive a fixed rate of return during the loan period and it includes both the principal and interest. With Crowd Funding the HOA (for example) only pays a fixed rate to the Investment Advisor (usually in the form of an origination fee of 1.0 to 1.5% of the loan) at the time of the loan.
Associations borrow at a lower rate than banks are offering with less paperwork. HOA’s borrow funds at a lower rate for major Capital Improvements, and the investors seeking a fixed rate of return that is better than the bank or equities markets are offering will benefit also.

Unlike equities based Certificates of Participation, shares in this case are not sold. A person, no matter the size of the investment at the time of the Project or Loan, receives the same as a person making a much larger and sizeable amount. The benefit of a Certificate of Participation is that it is much cleaner and more transparent than a REIT or a separate LLC. What say you?

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