AdaPia d’Errico enlightens us on the impact that real estate crowdfunding is creating within communities around the US.
With the loans borrowers are receiving through crowdfunding, they’re able to rehab and revitalize previously uninhabitable homes. In addition, more jobs are being created to help fix up the homes and get them move-in ready.
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
AdaPia: Hi, I’m AdaPia d’Errico, I’m the Chief Marketing Officer at Patch of Land. And on today’s REI Classroom, I’m going to be your host. And today’s episode is about how crowd funded residential real estate projects are making a difference in American communities.
Mike: This show is sponsored by PassiveRental.com.
AdaPia: So thanks very much for joining me. This is a topic around real estate crowdfunding that doesn’t often get talked about. There’s a huge focus, obviously, on the business of real estate crowdfunding, on being a borrower or being an investor and a lot of technicalities. And I think that these topics have been covered very in depth on this show and all over the web. I mean, this is how we get the word out.
So I thought it would be fun today to talk about something that’s really meaningful about real estate crowdfunding, aside from the way that we’re giving access to capital and creating access to investment opportunities. And that’s really the impact and the difference that this capital is actually making in our neighborhoods and in communities.
As many of you may know, real estate crowdfunding started with the Jobs Act. And the Jobs Act was a stimulation bill, let’s say, for jobs, after the Great Recession and a lot of devastation really that happened in real estate across the country. And so there are neighborhoods and properties, beautiful properties, neighborhoods, communities that were really just abandoned all over the country. And a lot of entrepreneurs saw that as an opportunity to do something for those communities by doing crowdfunding.
And what we’re seeing is it’s actually a really interesting way for investors to actually contribute to the rehabilitation and the revitalization of distressed properties. Unless you really know what you’re doing in terms of rehabbing and revitalizing properties, buying these properties at auction on short sale, foreclosure, I mean, there are all these technicalities, you wouldn’t know how to do that. I don’t know how to do that. But the borrowers that we work with at Patch of Land, they do. And investors are actually contributing funds to these small businesses that are operated by these borrowers.
And so it’s an indirect way for investors to participate in making properties whole again, bringing them back up to market value because they’re so under value that you can’t really purchase them and live in them. Like you need to purchase them, fix them up and then sell them or rent them to families who would like to live there.
And this goes a long way. Crowdfunding in real estate is making a big dent in this revitalization. So this is an incredible aspect, like I said. It’s something that brings a lot of heart and soul into an otherwise purely financial transaction.
And another thing about these projects that are facilitated through real estate crowdfunding is that it actually stimulates the economy. Because these borrowers are actually small businesses. They run crews, they have to buy materials, they have to hire people, a lot of people, to do the work to bring these properties back up to market value and making them beautiful again.
So it’s really creating jobs, local jobs, and it’s increasing property values. And I know that that can potentially be a scary topic, like, “Oh, they’re not affordable anymore.” But we’re talking about properties that you can’t live in. So it’s not about properties that…or you can live in them and then you just put a coat of paint on them and then rent them out for ridiculous prices. That’s not what we’re talking about. We’re talking about properties that were barred up and nobody could live in them anymore.
So the function of going in and bringing them back up to market value, making them livable again, is creating jobs also in the process of making that whole thing happen.
And at Patch of Land, we continue to use our crowdfunding portal to do more of these projects, to find people that are really focused on their local communities. And it supports their efforts. I mean, the thousands of investors that are on our platform, institutional and individual accredited, because we have a good mix, they’re all contributing to this change. And it’s neighborhood revitalization through crowdfunding. And I think that that also brings it home, that word crowdfunding, it brings it home to its roots, which really was rooted in social good and contributing funds to making a difference.
So this is what we’re doing. We’re creating a network of connecting opportunities, connecting borrowers to investors, and everybody working together indirectly, which is the incredible part of how this all works, to making a change locally, and actually nationally when you weave it all together, this tapestry, it’s making a change across the country. And this is how real estate crowdfunding is making a change in communities and through revitalization. So thanks for your time today, for staying with me, and we’ll see you on the next one.
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