What is Real Estate Crowd Funding? Why Now?
There’s a problem with today’s traditional real estate investment process. A real estate operator starts by identifying, underwriting and securing an investment opportunity. He or she then prepares marketing materials and legal documents, and conducts comprehensive due diligence all prior to closing. During this time, the focus is also on securing funding—both equity and debt—by pitching to high-net-worth investors and institutions one at a time. This is a lengthy, inefficient process and at certain equity requirements—generally less than $15 million—there are virtually no single-source options to raise necessary funds.
Real estate crowd funding leverages modern technology and new federal law to create a centralized process for these fundraising efforts. Instead of pitching an opportunity to investors on an individual basis, real estate operators can now present an opportunity on a single portal and connect with accredited investors around the U.S.—allowing unprecedented access to institutional-quality real estate opportunities.
How is Real Estate Crowd Funding Different Than Investing in a REIT?
The most accessible avenue into commercial real estate for investors, both accredited and non-accredited, has for long been publicly traded REITs. Anyone with a trading account can invest in a public REITs at a low minimum investment.
However investors in REITs are not investing directly in real estate, but are instead purchasing shares in a company that derives its revenue from real estate investments. Because of this, public REIT pricing is more reactive to movements in the overall stock market. Investors in public REITs also have no control over the individual assets a REIT chooses to invest in.
Fee-heavy Non-Traded REITs (also known as Private REITs) and Private Equity Real Estate Funds are less reactive to the stock market than Public REITs, but generally offer the same limitations regarding control and come at much higher minimum investments with even higher fees.
Under the Acquire crowd funding model, investors can invest in individual properties of their own choice, benefitting from complete transparency and control over their investment decisions.
Let’s Talk Liquidity. Can Income be Realized by Your Client Before a Sale Occurs?
Acquire recognizes that the illiquid nature of real estate investments can often be a deterrent for accredited investors that seek access to cash in the near term.
At Acquire, we focus on investments with existing cash flow, resulting in regular rent distribution checks to our investors. We also work with premier sponsors who have proven they can survive the challenges of the industry and have a minimum level of assets under management. Acquire is also the only crowd funding platform to offer the Acquire Exchange, a tool where investors can put their equity interests up for re-sale, affording our members possible liquidity and creating a fully functioning secondary market for crowd-funded real estate investments.
What Kind of Information is Provided to an Investor About a Property?
While not all real estate crowd funding platforms operate under the same standards, Acquire addresses concerns relating to control by zeroing in on transparency.
Acquire is backed by executives with over 80 years of collective experience in commercial real estate; we understand the nuances of real estate investing and work to advise our investors in all aspects of the real estate investment process.
Every one of our investment properties is professionally managed, and our commitment to working with only high-rent Sponsors enables us to deliver stable, credit-worthy investments to our members. Our executive team meticulously reviews the Sponsor, location, financials and tenancy of every investment opportunity before we agree to back it. Throughout every step of the investment process, and well beyond, Acquire provides investors with the necessary research, tools and transparency to select the investments that best meet their financial goals.
Why Does Acquire Pre-Fund its Deals?
Because Acquire is an equity investor, and not an equity facilitator or listing service, we invest in each deal right alongside our clients to ensure that our interests are aligned. This unique approach provides a measure of security for our investors, letting them know that if the deal is good enough for them, it’s good enough for Acquire.
By pre-funding our deals with Acquire cash, we also eliminate the funding risk to our Sponsor, allowing us access to better Sponsors and better deals. We also have the ability to take investors into our deals on a rolling basis, which eliminates lengthy escrow periods, and often allows our investors to take ownership of their investments in less than a week after committing to a deal.
What are Acquire’s Fees?
Fees charged by real estate crowd funding platforms will vary by organization and we encourage investors to consult with their tax, legal and financial advisors prior to investing. As in all aspects of our business, Acquire aims to be 100% transparent about our fees relating to property acquisition, loan financing or management. While there is no cost to join the Acquire community and browse our investment opportunities, should you choose to invest, a fee will be associated with each investment made depending on the nature of the transaction. In addition to administrative and management costs, this fee will cover ongoing reporting and communications for the investment.
Address Potential Conflicts of Interest in Real Estate Crowd Funding.
When it comes to real estate crowd funding, valid concerns have been raised over potential conflicts of interest arising from when an investor’s interest is not properly aligned with the interest of its crowd funding platform.
Some crowd funding companies simply act as a listing service, posting deals to their site, receiving payments from real estate operators, and collecting management or administrative fees without making an investment of their own. This often produces a situation where the crowd funding company is incentivized to post as many deals as possible without doing the proper underwriting and due diligence to ensure a sound investment.
Acquire believes that you and your clients look at investments differently when your own capital is at risk, which is why we pre-fund each of our investment opportunities. In this way, Acquire remains an active participant in the deal while at the same time investing alongside our members so that our interests are fully aligned.
Are Acquire’s Projected Returns Guaranteed?
Similar to investing in the stock market, there is no guarantee when investing in real estate, and there is certainly risk in every real estate crowd funding opportunity. Acquire’s goal is to quantify this risk and remain transparent throughout the entire investment process.
While there are many real estate crowd funding platforms operating today, few are founded by experienced real estate professionals that have successfully raised and deployed over $1 billion throughout various market cycles. We strongly believe the main benefit of investing with Acquire is that you are investing in tangible assets around the U.S.—actual bricks and mortar property you can touch—supported by a team of advisors who have made real estate investment their career.
What Does the Future of Real Estate Crowd Funding Look Like?
Real Estate crowd funding is the greatest change to real estate fundraising since the creation of the public REIT. Our platform leverages technology to connect investors to operators, while at the same time streamlining the investment process, lowering administration costs and saving time.
As real estate crowd funding matures, real estate operators will be able to raise more money from more investors in a more efficient manner than ever before. The Acquire team and many real estate experts agree that real estate crowd funding will continually constitute larger pieces of the capital stack until it eventually becomes the single-source solution for operators’ funding needs.
About Acquire Real Estate: Acquire Real Estate is the only real estate crowd funding platform founded solely by real estate executives. Our team leverages more than 80 years of collective experience to bring the most sophisticated commercial real estate deals to our community of accredited investors. We are veterans in underwriting, acquisition, management and financing in excess of $10 billion, and we have successfully raised and deployed capital through various market cycles. We welcome you to connect with any member of our Leadership Team today.