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Commercial Real Estate Crowdfunding Laws: Lets Get Technical

Commercial real estate crowdfunding laws can be dense, yet more than ever, commercial investors are harnessing the power of the internet to raise funds on the fly.

Crowd-sourcing websites like, and draw in droves of investors on the daily, and the demand doesn’t appear to be slowing down anytime soon. In 2015, real estate investors dropped an estimated $484 million in crowdfunding sites alone.

Dubbed “the best way to invest in real estate,” these websites have leveled the playing field for investors of all financial capacities, but it hasn’t always been that easy. In fact, small investors have only been able to invest in these ventures for just over a year.

Before real estate crowdfunding hit its stride, investors made use of a method called syndication. In effect, an investor would often hire a sponsor to essentially track down a property and manage its sale. Project investors funded a large sum of the investment and eventually split the profit evenly based on share. Syndication was challenging to market, especially considering the types of technology on the market today.

The JOBS Act:

Jump ahead to 2012 and the commercial real estate crowdfunding laws change quickly — the Jumpstart Our Business Startups (JOBS) Act, Title III, was signed into law and effectively made real estate investment crowdfunding possible. The law required heavy involvement from the US Securities and Exchange Commission, which was tasked with rolling out a series of new rules before the JOBS Act went into full effect in 2015.

commercial real estate crowdfunding laws

The SEC started with advertising by deconstructing a part of the JOBS Act called Regulation D. In 2013, the agency lifted prior restrictions that prohibited the solicitation of private offerings for accredited investors while establishing protections against fraud under rule 506(c).

In 2015, the SEC altered Regulation A+, to open crowd-sourced investment opportunities to non-accredited investors, meaning an investor who has a net worth that’s less than $1 million and a gross income of $200,000 per year.

The regulation broke asset classes into two tiers — the first at $20 million or less, and the other falling between $20 million and $50 million raised per year. With this rule, anyone has the option to invest; for non-accredited investors, the cap is 5 percent of their annual income.

Finally, in January 2016, real estate crowdfunding websites could begin registering with the SEC.

For a full guide on SEC crowdfunding rules and regulations, visit the government’s website.


Real Estate Crowdfunding: A Trend That’s Here to Stay

The playing field is becoming more level for small investors thanks to a slew of real estate crowdfunding websites sprouting up across the web.

The crowd-sourced investment websites have become an expansive trend in the industry. In the last year, an estimated half a billion dollars pooled into sites like, and

To keep it sweet, it’s the trend that’s here to stay for commercial real estate. And for the next week, MyNOI will be covering the details you need to know when getting involved.

Realty Shares commercial real estate crowdfunding

Just over a year ago the U.S. Securities and Exchange Commission (SEC) opened doors to permit the use of the popular investment platform in an effort to help small investors acquire capital and additional protections under the law.

Regulators adopted A+ Offerings, which in turn expanded asset classes to two tiers, ranked between $20 million to $49.9 million and $50 million and above.

Real Crowd commercial real estate crowdfunding

In a statement released near the time of the adoption of the final rules, SEC Chair Mary Jo White stated he following: “There is a great deal of enthusiasm in the marketplace for crowdfunding, and I believe these rules and proposed amendments provide smaller companies with innovative ways to raise capital and give investors the protections they need.”

And investors are noticing. For the first time, accredited investors — or, someone who’s valued at $1 million and makes equal to or more than $250,000 per year — aren’t the only ones who can have a stake in crowd-sourced campaigns.

Realty Mogul commercial real estate crowdfunding

The regulations have gone a long way. Based on my experience owning my own share in one of these sites, they’re growing in popularity because they’re reaping returns. By next year, I expect the number of dollars invested in these sites to double.

Now, I’ve already identified the top brass in the real estate crowdfunding sites today, but I’ll also recommend a valuable place to search for reviews and rankings as well as stats on fees or other features on the hundreds of crowdfunding options available.

It’s called and it offers readers the top 100 real estate crowdfunding sites on the web today. So if you’re looking for facts and figures, check it out.

commercial real estate crowdfunding review

You’ll find that many these sites have similar components. Often, you’re presented with several properties detailing the project, the developer or investment group as well as their investment and project history and return.

By law, parties leading the crowdfunding effort will need to disclose the amount of money they’ve put in as well as their intent for the property.  

As an investor, it’s your choice to drop a dollar in several properties or just one.

So take a careful look at your options and consider giving real estate crowdfunding a shot — I predict it’s here to stay.