If you are itching to invest in real estate but don’t have the down payment to buy a property of your own, there are new startups in the real estate industry that give you an opportunity to invest without buying an entire property outright. Curious to learn more? Read on to learn about the startups defining the new real estate marketplace lending sector, and how you can put your money to work in real estate.
The Benefits of Marketplace Investing
Marketplace investing is a new industry that has grown to fill a gap in real estate lending where the big banks were unable to lend. Marketplace lending is commonly focused at “midmarket” projects, which are too big to get funding from a community bank or credit union but too small for the big banks.
This budding industry has opened up real estate investment in multi-unit housing and commercial projects around the country, particularly in hot markets like Denver, Portland, and Raleigh and underserved markets throughout the Rust Belt and Midwest.
Marketplace lending allows regular investors to get into real estate investing without dedicating tens or hundreds of thousands of dollars and gives funding to projects that may have otherwise struggled.
Build Your Portfolio Until You Can Buy a Property on Your Own
Does marketplace lending excite you as an investor? You’re in luck. Most marketplaces have relatively low initial investments starting around $1,000 to $5,000. If you are going to invest, there are some important potential roadblocks you should know about.
Most of these marketplaces are only open to “Accredited Investors.” Even if you are a stock market and real estate investment pro, you need to qualify per FTC guidelines to invest in these marketplaces, as they are considered “high risk” by the nation’s investment regulating body.
The requirements are to have an income of at least $200,000, or $300,000 for joint income households, for the last two years with an expectation of maintaining or growing income in the futures. Investors that don’t meet the income test can also qualify if they have a net worth of at least $1 million.
If you don’t qualify as an accredited investor, you can still invest in the marketplaces with more limited options. As of this writing Groundfloor appears to be the best option for non-accredited investors.
Leverage the Marketplace for Your Big Real Estate Project
As a real estate investor, you might be interested in using the platform as a borrower. These platforms all offer an exciting opportunity to raise funds outside of the traditional bank lending industry.
Whether you are looking to fix and flip an apartment building or buy and hold a commercial building or shopping center, you may be able to find funding through a marketplace lender. Even better, marketplace lenders often offer competitive rates that can beat interest rates from the big banks. Your experience will vary based on your experience, down payment, and the specific project you choose.
Marketplace Lending Platforms
If you are interested in getting involved in marketplace real estate lending or borrowing, here is a list of active platforms. AgentHarvest did not do additional research into specific platforms or their quality, so your experience may vary. AgentHavest is not affiliated with, nor had any contact with any of the businesses listed below.
- Orchard Platform
- Patch of Land
A New World of Real Estate Lending
Following in the path of marketplace lending for personal loans, popularized by brands like LendingClub and Prosper, real estate marketplace lending has a bright future ahead. This is a new and budding industry, and it has a bright future ahead.