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Apartment occupancy declines brought on by the coronavirus pandemic are likely to adversely affect real estate credit markets at least into the first part of next year, experts say.

As the coronavirus continues to rock the biggest and most profitable cities in the country, investors and lenders alike are scouring secondary markets for safe havens — or investments that won’t lose value when the market gets rough.

2020 is shaping up to be a year that most people will want to forget. It has been particularly challenging for the nascent real estate crowdfunding industry, which — like many others — has been affected by Covid-19. This resulted in diminished deal flow, layoffs and suspensions of share redemptions.

Real estate crowdfunding platforms that came of age in an improving market and growing economy following the approval of the JOBS Act in 2012 are being put to the test in the wake of the COVID-19 recession. Although crowdfunding still represents a fraction of the overall capital flowing to commercial real estate, they are credited with bringing tech efficiencies to fundraising and making it easier for individual investors to participate in direct real estate investment offerings.

The Securities and Exchange Commission has expanded its definition of accredited investors to include financial professionals, among other amendments adopted by the agency this week.Only accredited investors can participate in private investment offerings, which do not require the same disclosures as public companies and therefore afford fewer protections to investors.

Up until recently, when you broached the topic of private investing, this concept was exclusively in the realm of the affluent. However, a new regulation – specifically, Title III of the JOBS Act, otherwise known as Regulation Crowdfunding – opened this exciting arena to the public. Now, virtually anyone can participate in equity crowdfunding opportunities.

While Adam Kaufman, co-founder and COO of real estate crowdfunding platform ArborCrowd, hasn’t yet seen a decline in investor appetite for multifamily, he is urging caution.

As a true advocate for real estate crowdfunding, Adam Kaufman’s passion and commitment to the concept is exemplified and imparted on to his employees, thus improving internal motivation and processes. Merging technology and real estate investing, Kaufman acts as an authority on the matter.

A little more than a year after making its investment in the property, ArborCrowd — part of the Arbor family of companies, which also includes Arbor Realty Trust — has exited its position in a 707-unit multifamily portfolio in Sioux Falls, S.D.

ArborCrowd (the “Company”), the first crowdfunding platform launched by a real estate institution, announced today that it has exited its investment in the Sioux Falls Multifamily Portfolio, a collection of Class B apartment communities located in Sioux Falls, S.D. This strategic decision generated a net internal rate of return (IRR) of over 16 percent, exceeding the original targeted net IRR of 12 to 14 percent.