The annual Executive Conference on Real Estate (eCore) was held at the Trump National Doral in Miami from Nov. 7 – 10. At this year’s summit attended by various real estate executives from around the nation, real estate crowdfunding played a prominent role with participation by top industry executives as well as a well-attended panel titled “Raising Millions in Minutes – How tech is changing the investing landscape.”
The panel featured ArborCrowd COO and Co-Founder Adam Kaufman, Ryan Munoz of Cadre, Michael Weisz and Mitch Rosen of Yieldstreet, Ilya Gamer of CrowdStreet, and Chris Fraley of RealtyMogul.
The general sentiment shared by the panelists is that the real estate crowdfunding industry is growing rapidly with more investors and transactions, and there’s still a tremendous amount of unrealized potential for the space.
“We’re just scratching the surface, there’s a lot of untapped areas to explore and it’s just growing, and access is just growing,” Kaufman said.
He added that loosening regulations will allow for even more investors to enter real estate crowdfunding, an industry that emerged following the Jumpstart Our Business Startups Act of 2012 and has grown into a multibillion market in under a decade. In fact, the U.S. Securities and Exchange Commission expanded the definition of “accredited investors” last year to allow certain industry professionals to invest even without meeting the traditional income or net worth thresholds, boosting the number of investors who can benefit from real estate crowdfunding.
In addition to the future prospects of crowdfunding and regulations, panelists discussed topics such as liquidity for investors, the deal evaluation process, fees and crowdfunding models.
Kaufman explained ArborCrowd’s unique model of prefunding deals prior to offering them to investors. This allows ArborCrowd to close a deal before launch and give investors full transparency about that specific deal. It also represents a sign of confidence in a deal as ArborCrowd’s own capital is as risk. Therefore, “we’re very selective in the deals that we do,” Kaufman said.
Kaufman further noted that ArborCrowd is a member of The Arbor Family of Companies, which also includes publicly traded real estate investment trust Arbor Realty Trust. This allows ArborCrowd to access a proprietary network of industry relationships and deals with strong upside potential. Additionally, ArborCrowd has insight into best-in-class national real estate data, giving it a unique understanding of industry trends.
When the panelists were asked about which asset classes they are focused on, Kaufman reinforced ArborCrowd’s commitment to the real estate multifamily space.
“We think that’s the bread and butter of the industry,” Kaufman said. “We have a tremendous amount of expertise in that area.”
He also touted the more than 30 years of experience The Arbor Family of Companies has in multifamily real estate. Multifamily has been the most resilient real estate asset class during prior recessions and has produced solid results year after year as people always need a place to live.
Regarding goals for 2022, Kaufman was excited for opportunities in the single-family rental (SFR) and built-to-rent (BTR) asset class. SFR units are attached or detached homes and townhomes that are operated as rental units instead of being owner-occupied, while BTR communities are SFR properties specifically developed from the ground up to be operated as rental units. The Arbor Family of Companies has been an early adopter of the burgeoning asset class, having already loaned or committed approximately $500 million to the space in the first nine months of the year, with a pipeline of more than $1 billion of upcoming deals.
SFR has been around for many decades but gained popularity among investors following a wave of foreclosures after the Great Recession. SFR and BTR communities were particularly resilient during the downturn caused by the COVID-19 pandemic, as renter demand greatly increased driven by the need for more privacy and space for remote working, as well as demographic shifts. Kaufman sees these trends continuing to fuel the growth of the asset class.
“We are going forward in the single-family, built-to-rent space,” he said, adding “we think that’s where the market is going, and we are very excited for that.”