Real estate crowdfunding to top $2.5 billion in 2015

Real estate crowdfunding was a $1 billion industry in 2014 and is expected to grow to $2.5 billion in 2015, according to a new report.

The report, published by Massolution this week, provides comprehensive data on the size and composition of the real estate crowdfunding market.

Investors and homebuyers across the globe are using crowdfunding as a way to profit from commercial real estate or to finance the purchase of their own homes.

While still emerging, particularly in the Canadian market, the industry is growing quickly. There are currently 85 real estate crowdfunding platforms in operation.

The report says that this type of financing has benefits over real estate investment trusts (REITs), including speed and diversity due to the use of technology.

Crowdfunding is more commonly used for commercial and industrial investments, compared to residential or multi-family investment, according to the report. However, it is being used as an alternative finance method for individuals looking to move into their first home.

“Residential crowdfunding has the breakout potential, as a mortgage loan origination, a trillion dollar market, is opening up to distributed platform financing,” said the report.

Carl Esposti, founder and CEO of Massolution, said: “The intersection of real estate and crowdfunding is enabling a huge leap within the industry away from the old property syndication model to new intermediated marketplaces that go way beyond performing the role of a simple distribution channel.

“Given the interest in real estate as an asset class and its explosive growth as a top crowdfunding category, we are pleased to provide the market the first report focusing exclusively on real estate crowdfunding, with accurate data and forecasts on this important category.”
 

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