What You Need to Know About Real Estate Crowdfunding in Austin
Texas real estate is a booming industry. Not only is the market hot for buyers and sellers who are interested in purchasing and selling homes throughout the state's metropolitan areas, but it also offers ideal conditions for investors who want to develop both residential and commercial property. Recently, real estate crowdfunding has started to play a major role in the ability for people to invest in the area's real estate. Austin (and surrounding cities like Cedar Park), in particular, is experiencing an influx of real estate crowdfunding investments.
What is Real Estate Crowdfunding?
Like other popular crowdfunding platforms, real estate crowdfunding sites provide people who are interested in starting a real estate investment to connect with those who are able to fund those types of projects. For example, someone who wants to develop an apartment complex in Austin would be able to launch their project on a real estate crowdfunding site and begin accepting donations from interested investors. Generally, there is an incentive offered to investors, such as gaining equity stakes in the property once it is developed and occupied.
According to Bloomberg, real estate crowdfunding is on the rise across the entire country. In 2015, more than $484 million was invested nationwide into real estate crowdfunding projects. The article also notes that there are more than 120 different real estate crowdfunding sites on the web in the United States.
While some experts are worried that crowdfunding is a trend that will fade as quickly as it rose into popularity, others feel that it is here to stay. The numbers in Texas, for example, indicate that crowdfunding is a reliable financing option for real estate developers and it may be the new, modern way of doing real estate business in the region. Ultimately, the success of any crowdfunding campaign comes down to the idea that is being offered as well as the platform in which it is launched. In Austin, it appears that whatever the real estate investors and crowdfunding campaigners are doing is working.
What's Happening in Austin?
One crowdfunding site, in particular, is making its mark on the Texas real estate market. In April 2017, RealtyShares released data that revealed that Texas is one of the most vital and active real estate crowdfunding markets in the country. According to an article on Yahoo! Finance, there were 31 different real estate deals on the RealtyShares site in Texas, and the deals raised a total of $28.1 million. It puts the Texas market in line with other valuable markets in the country, including Florida and California.
In Texas, the majority of the crowdfunding real estate projects were based in Dallas-Fort Worth, Austin and Houston. This is not surprising, considering these are the thriving metropolitan regions in Texas and the residential real estate markets are currently booming.
The Texas crowdfunding projects are made up primarily of multi-family properties, including luxury townhomes and apartment complexes. These deals were more likely to be equity investments rather than debt investments, and investors are willing to consider these projects because there is the potential for high investment returns (especially in rapidly growing areas like Leander) considering the strong economic climate in the state.
Those who are interested in benefiting from real estate investments but aren't sure whether they can finance an entire project on their own may want to consider real estate crowdfunding. It's an innovative option that is allowing people from a wide variety of industries and backgrounds to take advantage of the favorable market conditions in Austin and throughout the state of Texas.
To find out more about investing in the Austin real estate market and to learn more about the current market conditions, contact us today.