In this episode, Robert talks to Ian Formigle about investing through a crowdfunding platform.

Robert Leonard:
Why would a real estate investor decide to invest in real estate through a crowdfunding platform rather than just investing in the deals directly themselves?

Ian Formigle:
The number one is access. Investors come to our platform and tell us how amazing it is for them to see great deal flow from real estate operators all over the country. Most of whom they would never have been able to get to know or see their deal were it not for our marketplace. Prior to online platforms, commercial real estate investing for individuals was largely a local game. If you think about it, you’re maybe living in your part in your city. If you’re lucky, you were introduced to somebody from a friend or a colleague. That group is probably based in your Metro, and they’re probably doing a deal somewhere in your state. That’s kind of how syndication used to occur. What our marketplace has done now is that we have investors from Orlando investing with groups based in Seattle, and vice versa. So, for investors, an online platform brings an entire nation of real estate operators and real estate investment opportunities, literally to your fingertips in your own home at your own time.

Number two, I think is vetting. Prior to launching on our marketplace, every deal that you see on our platform must pass a multi-step vetting process that includes us reviewing the sponsor, the deal, and the terms of that deal. CrowdStreet has a team of employees, for example. They are situated all around the country. They’re constantly hunting deal flow. Although, I can’t say that I recommend or give investment advice to anybody in general out there, what I can say is that we do have a thorough vetting process. And by that, what I mean is that roughly about 5% of everything that we see out in the field is what actually makes it onto the marketplace. Investors can read a full overview of our vetting process and watch videos that discuss it in more detail on our website.

The third I would say is education. This is the fun part. I enjoy it. I hear it from investors every day. And I appreciate that when I’m at an investor event, people come up and talk to me about how we’re giving them great education and great tools that they utilize every day. It’s allowing them to jump up the learning curve and become better-informed investors. That’s part of why we set out to do this. Let’s increase the sophistication of everybody together. I would say that our catalog of written content is vast, but it’s really when you pair it with our webinars that we hold on a constant basis that really makes for a powerful combo.

The fourth I would say is consolidation. Currently, about 67% of active CrowdStreet investors have invested multiple times on our platform. And the number of repeat investments among those investors can actually reach over 80 deals for a couple of investors. Once we see that investors amass maybe at least five or more investments, then we definitely notice they gain a lot of value from consolidating the reporting and the analysis of their active investments through our platform; through what we call our “investor rooms.”

And I think the fifth and final thing is the ongoing involvement. What I mean by that is that as offerings appear in the marketplace, well, that’s not when we stop the involvement. CrowdStreet stays involved throughout the entire holding period of that investment. That might be for two years, or it might be 10 years. In many instances through our investment vehicles, we are also co-investors right alongside the marketplace participants. We have a growing team of professionals at CrowdStreet that monitor investments and they communicate with investors.

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