RealCrowd (YC S13) Raises $1.6M to Bring Crowdfunding to Real Estate | Hacker News Reader

RealCrowd (YC S13) Raises $1.6M to Bring Crowdfunding to Real Estate

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36 pointsjconley11 comments

Congrats!

I really like the site and the concept. Two things:

1.) How do you make money? As a potential investor, I wish this was more transparent. One of the reasons I use Betterment and Wealthfront for equities is that their fees are very clear on their homepage. Because real estate has a history of hidden fees, I think it's important to highlight this right away.

2.) What does "$235m+ in Transactions" mean? Closed through RealCrowd? In funding? Previous closes with the principals of the company?

Wish you guys the best of luck, and am excited to watch you grow!

1.) We charge operators listing fees and use typical recurring SaaS pricing for the investor/asset management features. We're (of course) working on a home page redesign that communicates this clearly. RealCrowd pricing is not unlike an MLS or other marketing platform.

2.) $235MM+ is the total value of the assets that have received equity funding through RealCrowd. Kind of like PG saying YC portfolio companies have a total value of $XXB. Though in our case that number is based on the value of real property at the time of acquisition.

Thanks!

EDIT: Grammar

Makes sense - thanks for the quick response!

This is really great! One comment I would have is that it'd be great if you had more educational materials.

Your site eases entry into this type of investing for folks that might technically fall under the accredited investor umbrella but never have taken advantage of that fact, and don't know the in's and out's of real estate investing. For example, the deal structure for a particular offering has a really brief description in the mouseover text, but I couldn't find it explained anywhere in detail.

Thanks for the feedback! We do have two eBooks (you get them upon signup), with another in development. We are also working to create a dedicated educational section and will definitely include more inline help in the future. Feel free to contact us with any questions.

Fintech entrepreneurs: If you want to help solve the underfunded pension crisis in the world, and/or help increase the wealth of the bottom 95% work on building a product that allows non-accredited investors to crowd fund real estate, where the investors own 100% of the property and the sponsors earn a fee for managing it.

If the bottom 95% were allowed to crowd fund real estate wealth would very quickly be more evenly distributed.

Regulations are currently prohibitive in this area. Look for that to change soon as the JOBS Act implementation gets finalized.

Why would I use this instead of a REIT?

Why can't these development companies get traditional funding?

RealCrowd co-founder here...

The investments are direct with the real estate operating companies, avoiding layers of fees imposed by the REIT structure.

These sponsors do get traditional funding. The operators we select to be able to post on RealCrowd do not need capital from the internet at large. Instead they augment their fundraising or recapitalize an existing property so they have more free capital, allowing them to do more deals. Since we do not charge any carry or other fees to investors, sponsors also bring their traditional investors onto the site to make the fundraising process easier.

More info on our operator-focused page: https://operators.realcrowd.com

But the real estate operating companies could "augment their funding" equally well from traditional investors, unless those investors are capital constrained (I don't think they are).

"Augmenting their funding" through the site also allows operators to build relationships with new investors and expand their network. It's lead gen for them for future deals.

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