Liquidity is one major concern among real estate crowdfunding investors. Prior to the Jumpstart Our Business Startups (JOBS) Act, it was very difficult to leave a deal once an individual signed and invested money into it. Even if the investment is not showing the expected returns, an investor cannot divest itself from the deal.
However, this is no longer the case due to the changing landscape of the real estate crowdfunding (RECF) industry. Investment crowdfunding (or Title III) rules of the JOBS Act is now on the scene. RECF platforms are using the secondary markets established after the JOBS Act, to enable exit deals for investors anytime they want it after the holding period is over.
David Drake, Chairman of LDJ Capital, says, “It is a normal reaction for an investor to reach a point wherein he decides that leaving a deal, for whatever reason, is the best option. Investors are always looking for investments that provide these exit deals. The best way to achieve this is through secondary markets. This report discussed some of the available secondary markets where investors in RECF industry can trade their shares like ordinary stocks. These markets have solved one of the major challenges in RECF industry – illiquidity.”
CFX secondary market is one of these secondary markets that allow RECF investors to transfer their private shares into multiple asset classes. This secondary market was launched by Chicago’s CFX Markets and is owned by PeerRealty, an RECF platform. The market is open and secure, allowing sellers to display their shares so that buyers can scrutinize them before making a decision. The entire transaction takes place on the secondary market. Besides its owner, other RECF platforms that are already using the market include American Homeowner Preservation, PropertyStake and CrowdFranchise.
Another secondary market is the Investor exchange. This is an automated secondary market owned by Acquire Real Estate. The market also allows RECF investors to sell their private shares to willing buyers. The sellers can locate prospective buyers, create required documents and consents, establish value of their shares, and sell the shares via an auction process. This market is currently available to Acquire Real Estate subscribers only.
Many investors have been reluctant to join the booming RECF industry because of illiquidity. The emergence of secondary markets and entry of RECF platforms into these markets will undoubtedly attract more investors. The fact that you can trade your crowdfunded shares on a secondary market the same way ordinary shares are traded on stock markets is another reason you should join the real estate crowdfunding industry and pump in more money because you can now exit easily.
An initiative of David Drake, the report is already the third edition. TRN started preparing this report in 2014. This report by Times Realty News provides an analysis of the changing realty crowdfunding landscape and offers insights into the top RECF platforms in the industry.
All these regulations have attracted more players in RECF space because they are a win-win for both investors and developers.
Order your copy at http://timesrealtynews.com/2017-trn-real-estate-crowdfunding-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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