Crowdfunding Real Estate to Renovate Hospitality Properties

April 6, 2018 by Brandi Jackson
Crowdfunding Real Estate

In the hospitality industry, crowdfunding projects are quickly gaining a lot of momentum. Many of the biggest real estate crowdfunding websites and networks frequently have private placements and hotels mixed in with a variety of other offerings for real estate around the country – making them a perfect place for those looking for hospitality properties.

A few crowdfunding sites have even begun to focus specifically on the hospitality world, particularly as retail stores continue to close down, and hospitality sees a boom in popularity. The rise of RECF has meant that today’s hotel developers and hospitality entrepreneurs will now have a new way to purchase or invest in incredible new buildings around the US.

How Does RECF Differ to Traditional Real-Estate Lending?

The first thing that investors need to know when they’re looking at crowdfunding real estate, is what RECF is, and how it compares to typical lending processes. Essentially, Real Estate Crowdfunding, or RECF is one of the fastest-growing solutions in the real estate industry, forecast to continue growing as the digital disruption transforms the world.

RECF refers to a process that offers traditional restate ventures or assets through various forms of financial product that can be distributed to investors using technology. RECF ensures that a broader range of investors, or a “crowd” can make smaller investors in real estate ventures in a manner that’s more cost-efficient. The aggregation of smaller forms of capital from broad investors can lead to a pool of capital that ensures a crowd can collectively purchase properties, lend money to developers, and take states in equity developments.

Obtaining Crowdfunding Real Estate

While RECF might be a more advanced form of lending, it’s worth noting that the people responsible for offering capital to developers for hospitality properties in this area are still looking for largely the same things as other lenders in the real estate world. In other words, they want to make sure that they’re going to get a return on their investments.

Ultimately, hospitality developers who are considering going into crowdfunding real estate should be looking for properties that are low-cost and high reward. This might mean flipping a previously abandoned CRE property into something that’s capable of bringing in a high profit. On the other hand, it may simply mean developing new property in a location that has the proven ability to bring in new forms of revenue.

Interestingly, however, RECF platforms do allow borrowers looking for capital in riskier ventures to obtain a better chance of funding. Because the convenience of the online crowdfunding real estate platform makes it easier for smaller investors to offer the money they feel comfortable with, it’s much easier for investors to trust they’re not going to lose all their investment.

Crowdfunding Real Estate Continues to Grow

As a simple, but effective model for funding larger real estate developments, the crowdfunding model is bound to keep growing in the years ahead, particularly as technology developments make the concept easier to manage. What’s more, when it comes to larger hospitality properties, crowdfunding could ensure that developers can access the support they need.