Property crowdfunding arrives in US Midwest

Property crowdfunding arrives in US Midwest

PeerRealty is the latest in a long line of property crowdfunding companies to try and make its mark on the real estate world. In a bid to differentiate itself from the crowd, the Chicago-based company is only allowing accredited investors to invest in property. This means that as an individual investor, you must have an annual income of at least $200,000, or $300,000 if you’re a couple investing together. If not, then investors must have a net worth of over $1 million, excluding the value of any primary residence.

It’s clear to see why this is a necessity for PeerRealty, considering the latest offering is for investors to own a piece of a Belvidere shopping centre. The building is a 62,500-square foot shopping centre and Crosstown Capital Partners, the real estate company sponsoring the listing, is looking to raise a total of $1 million. Investments for this offering start from a minimum of $5,000, and for this amount a buyer would receive 50 class A membership units out of a total of 10,000. As of today, the listing has raised $106,000.
Matthew Baumann, co-founder of Crosstown Capital Partners, sees great potential in property crowdfunding. The Belvidere shopping centre offering marks the company’s first foray into this area of real estate. “It’s giving people who might ordinarily not have the opportunity [to invest] to get in and experience it,” he said.
PeerRealty CEO, Jordan Fishfeld said that he hopes to have two to five listings operating every month on the website in various asset classes.
Crowdfunding, in general has become a burgeoning business across the globe. In 2014, North America was the region that spent the most on various crowdfunded projects and the continent is expected to continue its lead throughout the rest of this year. US commercial and industrial property crowdfunding is predicted to see an increase of 250 percent, whilst in Europe, the sector is expected to exceed $1 billion.
With such interest being generated in property crowdfunding, many companies will be looking to offer new and unique ways to attract potential investors. PeerRealty has put together a marketplace where investors can participate in high-quality real estate deals with the nation’s most reputable developers, providing access to offers that were difficult to invest in prior to the company’s birth. Fishfeld said that he started the company as a way for middle-market Midwest investors – a largely untouched market – to buy into real estate.
PeerRealty is also set to participate in real estate technology accelerator, Elmspring’s demo day in mid-April, a move that will surely garner more interest in the company.

By Michael Catchpole
Michael is a freelance writer with years of experience writing about financial products. During his time reporting for Invezz, Michael focused on the real estate and stock markets.
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