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Feb 1, 2017 10:09 AM ET

Cross Cutting Regulations Disrupt Real Estate Crowdfunding and Financing

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iCrowdNewswire - Feb 1, 2017

The real estate crowdfunding space changed tremendously over the last four years mainly due to the Jumpstart Our Business Startups (JOBS) Act. It eased securities regulations thus helping small businesses to raise capital more easily, quickly and affordably. It also created numerous investment opportunities for ordinary U.S. citizens.

David Drake, Chairman of LDJ Capital, says, “I witnessed the gradual change in real estate crowdfunding space when the JOBS Act took effect in 2012. Now, nonaccredited investors participate in real estate crowdfunding deals, investors are better protected, and companies are more financially transparent. Learn and capitalize on these regulations to diversify your investment portfolio and create more wealth in real estate space from this latest report .”

These cross-cutting regulations, such as reducing minimal investment amount in each project, allowing participation of nonaccredited investors and allowing developers to sell their shares without the requirement of registering these offerings publicly, in the JOBS Act disrupted the real estate crowdfunding space. Securities offerings under Title II and Title IV rules must register with Securities and Exchange Commission (SEC), and act in accord with state laws regarding fees and reviews. With Title II rules, companies can only raise funds from accredited investors so they have to verify first the status of potential investors, and there is no ceiling on the amount. With Title IV rules, companies can raise $50 million a year in mini IPOs online from accredited and nonaccredited investors.

Title III and IV rules, on the other hand, allow companies to raise funds from both accredited and nonaccredited investors. Hence, there is no need to verify investor accreditation status. However, only a maximum of $1 million can be raised under Title III rules per year, with a cap on each investment depending on the annual income of investors.

Investors in the real estate crowdfunding space are better protected with these cross-cutting regulations. Investors, even if they want to, cannot put all their money in one basket, hence the investment cap provision in Title III rules. Real estate crowdfunding platforms must also provide potential investors adequate and true information about the sponsors seeking funds.

Companies raising over $500,000 under Title IV rules are required to submit audited accounts to SEC. Likewise, companies crowdfunding under Title III rules are required to disclose full information about their financial records. It is also mandatory for companies that are crowdfunding via intermediaries must do so with funding portals or broker deals registered with SEC.  

An initiative of David Drake, the report is already in the third edition. This report by Times Realty News provides an analysis of the changing realty crowdfunding landscape and offers insights into the top real estate crowdfunding platforms in the industry.

 

All these regulations have attracted more players in RECF space because they are a win-win situation for both investors and developers.

Pre-order your copy at http://timesrealtynews.com/2016-trn-recf-report/

About Times Realty News:

Times Realty News is the media stream for the emerging market of Alternative Realty Financing made possible through the JOBS Act, Crowdfunding, Regulation A+, Regulation D, Rule 506C and others. It chronicles the growth and development of real estate crowdfunding platforms, technology, and services. It also provides information, resources and a venue for real estate investors, entrepreneurs, developers and professionals in understanding and discussing the new laws and regulations for financial innovation in the real estate industry.

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Contact Information:

David Drake
09175789069

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