This California based online real-estate crowdfunding platform wants to democratize the sector in the US and make it accessible to mid-sized syndicators and average investors.
More than 90% of the world’s millionaires have built their wealth through real estate, but even then, an average investor finds it tough to invest in the sector. They may invest in small residential properties but scaling to a refrigerated warehouse or self-storage site is challenging.
That’s why real-estate crowdfunding emerged to help small investors buy a stake in large commercial deals by investing small amounts. The idea was to allow syndicators and developers to list their deals on such online platforms and get in touch with a pool of investors. But, the sector in the US is far from being truly democratized.
While most large crowdfunding platforms, like Fundrise and Realty Mogul, have moved towards a real estate fund model and do not directly list deals from different syndications, the few platforms that allow listing, like Crowdstreet, have very strict criteria for syndications.
For example, less than 2% of the syndications that apply get on the Crowdstreet platform, leaving most mid-size syndications out. Typically, large crowdfunding platforms look for large syndicators who manage hundreds of millions in assets. They charge above $40,000 to list a deal on their site, which is beyond most sponsors.
Now, a recently launched online crowdfunding platform Park Place Investment is all set to democratize real estate investing by removing all the hurdles real-estate professionals face while taking advantage of crowdfunding.
“We know you’re a busy professional, entrepreneur, parent, son, daughter, neighbour, etc. By investing passively in real estate syndications, you get all the benefits of owning real estate, including regular cash-flow distributions, tax benefits, and appreciation,” says Kam Zainabadi, CEO of Park Place Investment.
How it Works
The mid-size sponsors are locked out both by the institutional investors and the large crowdfunding platforms. That’s why Park Place Investment focuses on mid-size syndicators looking to raise between US$10-US$20 million in the capital. It has also waived listing fees for its early partners, removing the cost-barrier for syndicators for listing their deals.
It doesn’t even require sponsors to sign exclusivity agreements, unlike its competitors. For syndicators, Park Place Investment is one of the several tools they have to raise their capital. So, they get to keep total control of their deal.
If a significant number of syndicators cannot list their deals, the benefits of real-estate crowdfunding won’t reach a large number of small investors. Park Place Investment is addressing this problem.
Exemptions from the US SEC
Another common hurdle that sponsors face is obtaining certain exemptions from the US Securities and Exchange Commission (SEC) to list and advertise a deal on the Internet or social media platforms. It requires a high level of expertise and cost to file for these exemptions.
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Park Place Investment has teamed up with Silicon Valley’s top law firm, WSGR (AKA Wilson Sonsini), so that sponsors can take advantage of its experienced legal services to meet SEC regulations adequately.
The platform also creates marketing campaigns for the syndicators, which include a podcast to explain their deal to the investors. It hosts webinars for investors to ask syndicators questions about deals.
Park Place was founded by a team with over 40 years of combined experience in Commercial Real Estate. Everyone in its core team went to UCLA, spanning many generations, from 1995 to 2020.
