With the uncertainty of the market and skepticism towards traditional lending institutions, real estate developers are turning to marketplace lending platforms to secure loans for development projects. Crowdfunding real estate loans makes securing financing much faster by combining quality underwriting with technology.
Real Estate Crowdfunding Market is Growing
It’s not just developers and investors who are skeptical of institutional banks when seeking a loan. Since the 2008 crash, banks have become similarly distrustful of the real estate market. This cross street of apprehension and skepticism has opened up the door for alternate ways of seeking funds and loans for development projects. Crowdfunding real estate loans is on the rise, and it’s growing fast.
Although bank rates have hit a historic low, the red tape, and bureaucracy that a developer has to go through, securing a loan was a long and (often times) unsuccessful process. Newbie real estate developers, who have yet to build up a track record with banks and lending institutions were having a hard time getting the loans that they needed. And, if a developer got lucky enough to receive project financing, turnaround time could be quite long.
Low-Interest Rates on Real Estate Loans
Crowdfunding platforms are doing more than just offering low-interest rates. The whole process, from having a project approved to finding lenders, getting funding, and getting started on a development project is much quicker than the banks, and the whole loan process is much more transparent.
Thorough Vetting Process of Real Estate Investors and Developers
Speed and transparency do not mean that the vetting process of each investor and each borrower isn’t thorough. It is just as thorough, if not more so than the banks. But since the only thing standing between an investor and a great development deal, or a developer and a loan is the crowdfunding platform, the process is much simpler and quicker to get through. There are fewer hoops that a borrower has to jump through before their development project is approved.
Control and Self-Management
Developers are sidestepping the banks in favor of crowdfunding because of the efficient vetting process and quick turnaround, allowing them to jump on lucrative opportunities in a competitive time period. and direct access to multiple investors who can pool their money and share the risk. Crowdfunding has given the control back into the hands of the developers and the investors.
Crowdfunding through our online marketplace makes raising funds simple. Find out more at Sharestates.com.