A growing number of developers are using crowdfunding to help build or renovate apartment properties. That’s partly because traditional banks are less eager to lend as financial reform regulations finally come into action.
Regulations created after the global financial crisis force banks to keep cash in reserve to offset the risk of investments like construction loans. The rules are now finally being enforced, after years of uncertainty over how they would be put into action, notes Opalka. Many banks have already lent as much as they can without putting more cash on reserve.
“Multifamily real estate is a very common property type for crowdfunding… Real estate continues to represent somewhere north of 90 percent of crowdfunding,” says Markley Roderick, a partner with the law firm of Flaster/Greenberg. Apartment properties provide steady cash flow and stability. Also, rental housing is a type of real estate many crowdfunding investors are already familiar with.
