Tech Early Adopters Bolster Strong Real Estate Crowdfunding Totals in California
RealtyShares, the online marketplace for real estate investing that connects accredited and institutional investors to real estate investment opportunities, today released data on crowdfunding projects throughout California.
Looking to revamp the archaic industry of real estate investing through the use of technology, RealtyShares has solidified itself as a leader in the burgeoning real estate crowdfunding arena. California has been one of the most active states for the company that has its roots firmly planted in the Bay Area.
California borrowers and sponsors have raised more than $53 million across 90 properties in the Golden State. These projects range from residential fix-and-flips, to multi-family and commercial value-add investment opportunities, providing the RealtyShares network of more than 20,000 investors with a diverse set of deals.
“Good buys have been hard to find considering the substantial demand for California real estate,” said Brian Esquivel, Director of Equity Investments. “By leveraging the crowd, we still have the ability to vet attractive investment opportunities across the state as sponsors look for alternative ways to fund their projects.”
There were 68 residential opportunities on the website, split between debt and equity offerings. Debt deals made up the majority, giving developers and operators a chance to raise money for a project quickly and at a potentially attractive interest rate. Equity properties have different risks associated with them, but potentially offer higher yields, depending on the project.
While residential properties proved to be the largest driver of investment on the platform, commercial properties were also an important piece of the RealtyShares Californian portfolio. Sponsors raised funding for 16 commercial equity projects, led by a $1.75 million multi-family property in the Bay Area and a retail center in Sacramento that drew interest from 25 investors, including seven from the state. People have been drawn to the skyrocketing rents and thriving real estate valuations in the major metro areas, while balancing concerns that they are investing into an overinflated real estate market.
“Our commercial equity pipeline is growing at a good rate,” said Esquivel. “We have seen a lot of opportunity for a low cost, flexible, sub-institutional equity product across the country, and real estate crowdfunding platforms like RealtyShares are in a unique position to fill that gap. Working with sponsors, we can craft equity deals where our community can contribute either 90 percent of the equity requirement or sit side-by-side with other investors on the project.”
The Los Angeles area carries the crown for the most active metro, with 46 deals funded for more than $28.8 million. Much of that was focused on residential debt deals and fix-and-flips throughout the city’s large footprint. San Francisco and the Bay Area followed close behind with 24 properties for $17.6 million, sporting a higher average fund due to the inflated housing market and the preponderance of larger multi-family opportunities. The Sacramento area was the third most active, raising $3.8 million over eight opportunities, but featured a balanced set of asset classes for investors looking for local diversity.
People from California were some of the first to embrace real estate crowdfunding. Early adopters to the platform recognized that what RealtyShares is doing to streamline real estate investing is something that has been seen across many industries in California already.
“One of the most reliable recipes of entrepreneurial success in the last 20 years has been taking an existing asset class and making it freely tradable by anyone in the world over the Internet,” said Gene Linetsky, Chief Technology Officer. “That’s what eBay, Amazon, Google, Facebook, AirBnB and Uber have done, to name a few examples. And that’s what we are in the process of doing with real estate.”
RealtyShares continues to target supply constrained markets with diversified economic bases across the United States in an effort to give its tech-savvy investors diversification options they might otherwise not have access to. This type of investing has its risks, which is why RealtyShares has built a team of experienced real estate professionals to vet every sponsor and deal.
“Our value to commercial real estate owners and operators in California should only increase as our platform and capabilities grow, giving investors an even greater selection of investment opportunities across a variety of products, asset classes, and geographies,” said Esquivel.
In June, the company released similar data for Florida, charting the more than $28 million raised across that state. For more information, check out the company website and the RealtyShares California crowdfunding infographic, which can be found below.