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Crowdfunding has become something of a buzzword among investors these days and it’s been particularly well received in the real estate sector. Though it’s still in its infancy, real estate crowdfunding is rapidly reshaping the way individuals find and invest in properties. This shift has brought benefits not only for investors but also for real estate companies and for the real estate market as a whole. But this rapid growth also means important considerations for investors when choosing a platform to invest their capital with.

The old rules for real estate investing

In the pre-crowdfunding era, investing in private real estate was all about who you knew. Under the Securities Act of 1933, private securities investments (including securities of real estate companies) could not be marketed publicly. That meant that access to private deals was limited to investors who were able to seek them out through connections in their personal network. Or to better phrase it, the old country club model of finding and investing in real estate.

Once an investor was able to locate a private investment, she would then have to provide the necessary funding. The minimum threshold for gaining access to these exclusive properties could easily run into the six-figure range. These high buy-in requirements and the ban against publicly soliciting for these investments effectively shut the average investor out of a large segment of the real estate market. And for real estate companies, this meant access to capital for deals was also restricted to who they knew thus making capital very inefficient.

How crowdfunding has made access easier

From an investing standpoint, crowdfunding is a relatively new idea but it’s made big waves in the real estate industry thus far. With the passage of the Jumpstart Our Business Startups Act in 2012, some of the barriers that had previously existed for investors who sought a foothold in real estate were removed.

Specifically, Title II of the Act eliminated the restriction on general solicitation. For the first time in nearly 80 years, small businesses and start-ups were able to raise capital and advertise their offerings in a much more public way. That concept quickly carried over to the real estate industry and real estate crowdfunding took off with hundreds of millions of dollars raised through crowdfunding for real estate in 2015.

Through crowdfunding, instead of having to rely on connections to pinpoint real estate deals and having to put $100,000 or more into a single deal, investors can access these deals from the convenience of their laptop or tablet. And as the Founder and CEO of crowdfunding for real estate platform, RealtyShares, I’ve witnessed first hand the quick adoption by first time and veteran real estate investors of this new way of investing in a far too familiar asset class. In addition to better access to pre-vetted deals, crowdfunding platforms also make it possible to begin investing with as little as $1,000.