Press

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.

Commercial real estate crowdfunding platform ArborCrowd announced on Monday it has exited its investment in the Sioux Falls Multifamily Portfolio, a collection of Class B apartment communities located in Sioux Falls, South Dakota. ArborCrowd reported the decision generated a net internal rate of return (IRR) of more than 16%, exceeding the original targeted net IRR of 12% to 14%.

The nascent real estate crowdfunding industry is facing its first major economic downturn. With the coronavirus disruption of the capital markets well into its second month, many major players are stacked up on the sidelines.

As the industry continues to experience shockwaves as a result of the coronavirus pandemic, many market participants have put deals on pause. Commercial Observer caught up with Adam Kaufman, co-founder of ArborCrowd, to hear why a pause is the best thing for crowdfunding investors, and what they should be considering when the market returns.