Better Business Bureau Warns of Real Estate Crowdfunding Scams

Welcome back to another issue of the newsletter. This week in new deals, we’ve got a Dallas-Fort Worth Multifamily Development from CrowdStreet and a look at the Live Q& A for Independence Timber Tract over at AcreTrader. We’ll move on to look at a real estate crowdfunding scam warning from the Better Business Bureau and crowdfunding platform StartEngine’s July performance numbers for their Reg A+, Rec CF Offerings. After, we’ll take a listen to a new podcast, Real Estate Crowdfunding with Levi Brackman. 

Let’s get into it.

New Crowdfunding Platform Deals

Provident’s Dallas-Fort Worth Multifamily Development by a 12x Repeat Enterprise Sponsor offers up unique tax advantages in Denton, TX. The local housing authority, the DHA, is offering up a 100% exemption for property taxes in addition to a sales tax exemption for taxable construction and project-related costs. Investing starts on August 24th, and investors can access a targeted investor IRR of 22.5%, a targeted equity multiple of 1.8x, and a targeted average cash yield of 5.9% right here on CrowdStreet.

The farm-focused folks over at AcreTrader are hosting a live Q&A for their latest project, the Independence Timber Tract, on Tue, Aug 23, 2022, 9:00 AM – 9:30 AM PDT. Timberland Acquisition and Investment Analyst Van Poindexter and AcreTrader Investor Relations Manager Zoe Buonaiuto are acting as hosts for the webinar.

They’ll look at the property’s regenerating hardwood forests, how they’ll be sustainably harvested for cash flows, how professional management can add value, and more. They’ll also be doing a live Q&A right after the session. If you miss the air date, no worries, you can find a streaming copy on AcreTrader, here.

General Crowdfunding Industry News

The Better Business Bureau released a warning to investors: beware of scammers taking advantage of crowdfunding. While the BBB is not a governmental organization, more like “Yelp for Boomers,” this does show the reach that the crowdfunding space now has- for better or worse.

In a somewhat related story, the SEC recently filed charges against a Denver real estate firm, WDC Holdings LLC d/b/a Northstar Commercial Partners. The suit alleges that CEO and Owner R. Brian Watson misrepresented their own investments in securities offerings to get funding for ten separate real estate projects. This is not the first fraud-related case that Watson has had to deal with, with tech-firm Amazon filing suit against Watson for running a real property-related kickback scheme in Virginia. While the overwhelming majority of crowdfunding market participants act ethically, when there is money around, you’ll always find fraud- so be careful out there, folks.

Crowdfunding Platform Updates

Crowdfunding platform StartEngine recently touted their July Performance numbers for Reg A+, Rec CF Offerings. The firm, which is one of the bigger investment crowdfunding platforms in the United States, recently posted that they raised more money under Reg CF and Reg A+ in July than the other top platforms, with the firm writing: 

“… in July $27.0M was raised under Reg. CF campaigns and $10.3M was raised under Reg. A+ for a combined total of $37.3M across the equity crowdfunding industry. Per the same data, StartEngine led the pack, posting the highest total amount of any platform at $10.5M raised between Reg. CF and Reg. A+ campaigns. That’s over 30% more raised than the #2 platform.”

The company is currently in the middle of a self-crowdfunding round through Reg A+, raising just under $6 million, with the total sough sitting at $46 million. Read more in this Crowdfund Insider piece, here.

Multimedia Links (Videos, Podcasts, etc.)

As always, we’ll finish off with a new podcast for your listening pleasure, 68: Real Estate Crowdfunding with Levi Brackman. In this week’s episode, host Chad Sutton interviews Levi Brackman, the CEO, and founder of Invown- a 2-sided marketplace for real estate equity. They discuss his best-selling book, Jewish Wisdom for Business Success, and his history as a serial entrepreneur and a real estate professional for almost 2 decades. Brackman also holds a Master’s degree from University College London and 3 rabbinic ordinations. Listen for yourself, here.

That’s it for now, but we’ll see you next week with lots more real estate crowdfunding news. Adieu!