Real estate crowdfunding startups have landed quite a bit of dough in funding rounds this year.
Now iFunding, which lets well-heeled folks buy shares of residential and commercial properties, is going straight to the public for its latest raise.
Put another way, the crowdfunder is, rather appropriately, crowdfunding itself, seeking to cobble together at least $1 million through a funding campaign that it’s posted on the website Crowdfunder.
Investors only have to pony up $10,000 to get in on the action. That’s likely possible due to one of the primary benefits of crowdfunding: It makes it easier for companies to vacuum up cash from a large number of sources.
More and more players are jumping into the real estate crowdfunding space, and investors are betting big on some of them.
Fundrise — which is one of the few real estate crowdfunders that makes some of its deals available to non-accredited investors — nabbed $31 million in May, while RealtyMogul picked up $9 million in March.
RealtyMogul also announced this fall that it would distribute $73 million in financing to home flippers on behalf of Direct Lending Investments.
The big appeal of real estate crowdfunding to supporters is that deals orchestrated through the financing method generally are more transparent and accessible than those set up through real estate syndication, its predecessor.
IFunding has already raised more than $800,000 in its funding campaign, which closes Jan. 16, 2015. It’s claiming a pre-money valuation of $20 million.
Investors can use iFunding to buy shares (equity funding) of single-family homes, new construction homes, multifamily properties and even multiproject funds. It also pools cash from investors into loans (debt funding) earmarked for real estate investments.
The company boasts that its real estate deals have averaged an eye-popping annualized return of 23 percent.
Only accredited investors — people who make more than $200,000 — can participate in iFunding’s real estate investments, though it seems possible the company might decide to open up some future investments to less-wealthy people if regulatory changes in the wings pan out the way many are hoping.
In August, iFunding rolled out iPhone and Android apps that let users “perform every function in the real estate life cycle,” including completing a transaction.
Like its website, the apps let users browse deals; invest in them by signing paperwork and initiating transfer of funds electronically; monitor progress of their existing iFunding investments by viewing information like construction activity and financial expenditures; and interact with other investors and the companies overseeing investments.