Six months after the Securities and Exchange Commission lifted the ban on general solicitation in Regulation D offerings, adoption of the practice remains muted among many industries thanks in large part to concerns over the requirement that issuers verify investor accreditation. Yet that hurdle, and the SEC’s plodding pace to adopt JOBS Act Title III rules that would open up crowdfunding to all investors, have done little to slow a ramp up of real estate private placement platforms.
While websites such as AngelList and EquityNet largely aim to help fledgling companies or entrepreneurs get off the ground, real estate portals are pursuing a broad range of strategies, from selling slivers of small loans to rehab single-family homes to raising millions of dollars to finance development. The platforms typically charge administration fees to investors or issuers. The platforms are also employing a variety of business models. New York-based Propellr, which officially launched last month, curates deals and plows 10% alongside its investors.
