The Re-Evolution of Real Estate Investment
Private Equity Crowdfunding vs Publicly traded REITs
The value of real estate in the debt and equity market has increased substantially since the 1980s. The securitization of residential and commercial loans has made real estate an increasingly important component in debt market and US economy. Since the mid 1980's, the prominence of Real Estate Investment Trusts (REITs) in the stock market has increased due to the securitization of real estate loans.
REITs operate pools of diversified Class A asset classes and their shares offer some sort of liquidity. However, investors continue to place nearly 80% to 95% of their real estate allocations into private real estate investments, rather than publicly traded REITs. Crowdfunding sites tend to simply focus on private opportunities with higher ROI than traditional REITs.
The recent movement toward online private equity crowdfunding has begun to make private real estate investment opportunities more accessible to nearly all investors. Real estate investment is a high barrier to entry industry that crowdfunding aims to solve by making investing in projects more transparent and accessible.
Some of the benefits of Real Estate Crowdfunding are:
- Investors via private equity can invest directly into projects they choose.
- Crowdfunding is not limited by asset class or geography.
- Private equity is typically more nimble and investor-aligned because sponsors are highly invested.