Once upon a time, anyone with a commercial real estate (CRE) investment opportunity could only offer it, courtesy of a 1933 law, to a select group of people – only those with whom they had a substantial business relationship. That usually meant friends, family, and business associates.
All that changed in 2012, when President Obama signed the Jumpstart Our Business Startups (JOBS) Act. One of the key components of the law was opening up that 1933 investment restriction. With the new law, individuals earning more than $200,000 per year, couples earning over $300,000 per year, or anyone having a net worth of $1 million, excluding their primary residence, could invest.
Crowdfunding was – and is – a game-changer in the CRE investment market.
Although the country is now five years into the legislation, it took until 2015, when Titles III and IV of the law were enacted, for real estate crowdfunding to explode. For starters, these new components eliminated the $1 million net worth requirement, thereby opening up investment opportunities to an even broader range of people.
To date, statistics are overwhelmingly positive:
Now that investors no longer need to know a sponsor, there is a growing investor interest in crowdfunding platforms.
Benefits are equally apparent for the sponsors and developers of real estate projects. As interest rates gradually inch upward, developers need to look outside of the traditional fundraising box in order to raise capital for their projects.
With the JOBS Act, they have been able to take advantage of new technology via the Internet to reach a broader pool of investors. With more and more individuals participating, there is a greater opportunity to do more projects.
Experts agree that crowdfunding is able to benefit larger metropolitan areas and smaller cities. In a place like South Florida, that’s especially important. Our largest cities are surrounded by satellite smaller cities.
Assisting South Florida in the crowdfunding frenzy is its population. In addition to American citizens, many of the residents from Latin America, the Caribbean, and Europe are cash-rich but comparatively contact-poor. With the JOBS Act, they can more easily participate in real estate development both at home and abroad.
Morris Southeast Group is among the top commercial real estate brokers in South Florida. To learn more about commercial real estate investment opportunities in the area, contact our team today at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at email@example.com for a free consultation.