Real estate investing may never be the same again.
Thanks to the JOBS Act of 2012, real estate finance is no longer reserved for equity firms and high net worth individuals. A new practice called "crowd-funding" makes it possible for a much wider range of individuals to participate in real estate development. Now individuals can invest $1,000 and receive part ownership in a building and a percentage of the returns from rent and appreciation.
Crowd-funding not only makes investment in large-scale real estate projects available to the public, but it also has the potential to ease tensions between developers and local citizens. It's not uncommon to find that locals are unhappy with the huge office park or hotel that's being built in their backyards. With crowd-funding, the public has the opportunity to have ownership and a voice in what being developed in their neighborhoods.
Ben Miller, founder of real estate crowd-funding website Fundrise, says the crowd-funding adds "social capital" to the development process. Locals often know what will succeed in their city better than remote consultants or big banks, and they have real connection to the project because it's in their city. With a thousand people invested--financially and emotionally--in a project, developers have access to an unprecedented amount of free marketing and local knowledge.
Long gone are the days of real estate investing being restricted to corporations and the super rich. With the growing popularity of crowd-funding, the new face of real estate investing may look pretty similar to your own.