Real Estate Tech Opens Market to Small Investors

It was about one year ago that RealtyShares created a new way for investors to put small sums of money into real estate projects. The company is likened to a “LendingClub for Real Estate,” as it provides a platform for crowdfunding real estate development. They subsequently allow investors to put as little as $5,000 into single and multi-family homes, as well as commercial real estate projects. Project cost ranges from $100,000 to tens of millions. 

If you’re a developer looking for funding, RealtyShares makes the process pretty darn simple, as it offers an easy way to obtain said funding. The company funds between 10 and 20 projects per month, and it takes about four days for each RealtyShares investment to receive funding. Compare that to weeks or months for traditional funding and you’ve got a great way to develop real estate projects. 

RealtyShares eschews banks and big-time investors in favor of collecting larger volume on smaller investments. The total value of properties funded through the site is already more than 70 million, and projects are generally funded about 12 to 24 hours after they’re listed. Additionally, sponsors and borrowers don’t have to worry about managing their investors, as RealtyShares does all the paperwork and payment processing. 

Led by General Catalyst, the company recently raised $1.9 million to make their new offering available to more developers and investors. Additional investors include E*Trade COO Greg Framke and president of Gold Bullion International Savneet Singh. Investors can pool money--as little as $1,000--in equity investments where they own part of the property. This results in quarterly or monthly cash flows from rental income as well as sale profits, though investors may also become property lenders and receive a fixed monthly income. 

The company has pointed out five specific markets with growing tech and real estate sectors that offer the opportunity to invest. These markets include Austin, Chicago, Seattle, Dallas, and Miami; RealtyShares hopes to connect borrowers and investors in a more efficient manner.

Such market-specific products allow developers to find funding from local investors interested in developing in their cities. Investors also enjoy the benefit of profiting from “better yields” in markets--ones that have yet to be overdeveloped.

RealtyShares was part of the seventh 500 Startups Accelerator Class, where it received much praise for putting money into projects generating a quick return among other services.