Why was Mark Cuban so wrong about Real Estate Crowd Investing?
July 2015By Steve Bettinger
Back when Real Estate Crowd Investing was thrown to the sharks, they didn’t bite. In fact, Mark Cuban showed immediate disgust and screamed, “I hate it- I’m out”. Was he off base? Not really, because Mark simply wasn’t presented with a true look at what Real Estate Crowd Investing is and has become.
Crowdfunding across all verticals is no longer considered a fad and is now part of the financial mainstream landscape. Real Estate Crowd Investing as an industry continues to grow and has become an attractive way to diversify financial portfolios.
Still there are misconceptions.
For example, why bother with Real Estate Crowdfunding when there’s nothing wrong with REITs? Because when you invest in a REIT, you are not investing directly in real estate. Rather you are purchasing shares in a company that derives its revenue from investments in real estate. Investors in a REIT have no control over where and how their money is deployed into real estate investments.
With Real Estate Crowd Investing, investors can invest in individual properties of their choice, which in turn provides complete transparency and control over their decision. Plus, investors in REITs are at the mercy of serious stock market like fluctuations, as in the case last year of a REIT that plummeted 30% in day when news of an accounting mistake was discovered.
Another misconception is that now everyone and their neighbor will be involved in crowdfunding, but what separates Real Estate Crowd Investing is that it is not for beginners and only for accredited investors. The SEC has defined accredited investors as having $200,000 of annual income per individual ($300,000 per couple) with the expectation of that continuing, or a net worth of more than $1 million, excluding the value of the primary residence.
Another common question is if the best real estate deals are available through Real Estate Crowd Investing. The answer to this depends on the crowd investing source. Do your due diligence and find out:
Does this crowd investing source have a strong real estate background and experience with significant real estate deals?
Does the management of this crowd investing source invest their own funds in the same projects?
If the answer is not yes to both, then look for another source.
For many, Real Estate Crowd Investing sounds risky. Like all financial investments there are risks to investing in real estate, but many believe that investing in tangible hard assets in the United States is a huge positive, especially when your investment is an actual property you can visit.
If presented correctly, Mark Cuban would have learned that many investors enjoy the fact that they can invest in a geographic variety of real estate opportunities from the comfort of their home. Real estate was famously called “an imperishable asset, ever increasing in value.” Thanks to the technology and the demand from accredited investors, Real Estate Crowd Investing is here to stay and flourish.
Steven Bettinger is the CEO of Acquire Real Estate, a leading real estate crowd investing site that provides access to the public to the real estate private placement business, bringing institutional-quality deals to the accredited investor.
This content was provided by Acquire Real Estate. Kiplinger is not affiliated with and does not endorse the company or products mentioned above.