2021 was a banner year for real estate crowdfunding

After a brief hiatus we’re back with another installment of “The GowerCrowd Real Estate Crowdfunding Newsletter.” We’ve got a wealth of stories to help you finish out 2021 and enter 2022 with a full understanding of where the crowdfunding industry stands, including a 14.9% IRR multifamily project from RealtyMogul, a discounted multifamily property with a favorable supply and demand story from CrowdStreet, and a brand new podcast from crowdfunding platform Fundrise. Let’s get into it. 

New Crowdfunding Platform Deals

As always, we’ll start off with a few new deals of note. Citizen House Decker, sponsored by the Prism Multi Family Group, is a brand spanking new Class A multifamily property on offer at RealtyMogul. This 2021-built property sits in close proximity to the new Tesla Gigafactory in Austin, Texas, and offers up an impressive 14.9% IRR, a relatively well-off local demographic with high household incomes in the fastest growing major city in the United States. The property has a purchase price of $77,100,000, which makes it a new Class A build which is being purchased below its current replacement costs. 

The year 1 cap rate for the property is projected at 3.71%, which is a full 20 basis points better than the general market cap rates in Austin for other Class A properties. It’s also got a 6.6% target cash on cash return and a 1.89x target equity multiple. If you’re interested in this new tech-oriented multifamily development you can find out more info directly at RealtyMogul, here.

Next up, we’ve got Junction Crossing, an almost fully occupied, Class A multifamily project constructed in 2018 in Fort Worth, Texas on offer at CrowdStreet. Currently, the property is being contributed at a 6% discount to its market value and offers investors the opportunity to potentially earn escalating distributions via pari-passu returns. In the North Fort Worth area in which the property sits, rent growth has outperformed the larger Fort Worth Metro Area for the last few quarters, with rent increasing by 17.8% year over year in Q3 2021. 

Junction Crossing has a targeted investor IRR of 15.4%, a targeted equity multiple of 2.6x, a targeted average cash yield of 5.4%, and a targeted investment period of 7 years. To get more details about this North Fort Worth multifamily property, head to CrowdStreet, here.

General Crowdfunding Industry News

If you’ve had the good luck (or foresight) to be involved in the crowdfunding space over the past few years, you’re likely aware that there has been somewhat of a Wild West attitude among some sponsors and investors. We’ve covered this subject before in the face of several SEC enforcement actions over the past few months in our GowerCrowd recent news section.

In 2022, it is likely that these actions will ramp up, as crowdfunding gains more and more adoption, and figures like the new director of the CFPB Rohit Chopra seek to make their mark on this burgeoning industry. In general, enforcement personnel hiring has grown exponentially, and many in the wider financial arena expect to see a substantial increase in enforcement actions levied against banks, crowdfunding sponsors, platforms, crypto firms, and other financial actors. 

Crowdfunding Platform Updates

While you are likely a voracious reader, we all need a break from print from time to time, whether you’re in the car, on a plane, or just not in the mood to stare at a screen, newspaper, or book. Which is why we’re happy to report that Fundrise is launching a new podcast, dedicated to all things real estate crowdfunding. 

In their podcast pilot, which launched earlier this month on December 11th, Ben Miller, Co-Founder and CEO of Fundrise and Emily Peck, Content Director at Fundrise, have a conversation about Fundrise’s Q3 performance, their focus on single-family rentals, how millennials look at real estate, and how we have yet to see the full range of changes wrought by the COVID-19 pandemic on the commercial real estate markets. It’s a great listen, you can find it on Apple itunes, here, as well as on Spotify, or Google Podcasts. 

That’s it for the last 2021 issue of “The GowerCrowd Real Estate Crowdfunding Newsletter.” Have a wonderful holiday season and we’ll see you in the New Year. Cheers.