The real estate crowdfunding sector is continuing to experience fast paced growth.
One example of this growth is the $2.9 million commercial real estate loan that Money360 closed. This one year loan was funded by several accredited investors and was made to a commercial property developer with significant experience developing accommodation for the oil services sector. The loan proceeds will be used to acquire an 18-acre plot of land upon which the borrower plans to build a 550-unit apartment building.
This loan is a way for the platform to start deploying the $100 million loan purchase agreement it secured in April, through a partnership with a leading New York investment firm. The platform also raised an additional $10 million in cash through its subsidiary, M360 Fund I, to fund its commercial real estate loans.
The loan is about 25% of the combined value of the collateral, which includes a 334 room motel and two additional lots (48 acres) where additional motels will be built. And importantly, monthly cash flow is several times the amount required to make the monthly interest payments on the loan.
Dan Vetter, President and co-founder of Money360, commented:
"Money360 provides investors with unique investment opportunities at better risk-adjusted returns than those offered by traditional investment vehicles, while also offering commercial borrowers a wide variety of loan options at better rates. Although this commercial loan in North Dakota is an unusual example of the kind of loans that Money360 typically funds, it definitely demonstrates the type of flexible, custom-tailored financing that Money360 can provide to help meet a borrower’s specific needs.”
Money360 sees the value in its platform as opening up an asset class, commercial real estate, to high net worth individuals as traditionally it has been reserved for institutional investors. The minimum investment on the platform is $50,000. The company has seen much of its demand coming from commercial borrowers who are looking to the platform to find the best solution for their commercial real estate borrowing needs. Money360 is experiencing significant growth and has had more than $150 million in loan requests in March 2015.
Evan Gentry, CEO of Money360, added:
“Online marketplace lending is a new and exciting industry that is rapidly expanding, and Money360 is well positioned as a leader in the commercial real estate sector of this industry. We continue to see increasing demand from borrowers who are looking for commercial real estate loans, as well as significant interest from investors who are seeking attractive risk-adjusted returns. We look forward to funding even more loans for commercial borrowers in the future.”
The real estate crowdfunding market is one that is experiencing significant growth. A recent Massolution report highlighted that real estate crowdfunding is expected to increase by 150% in 2015 equalling $2.57 billion, and that US commercial and industrial property crowdfunding should increase by 250%. The investment in Money360, and in other real estate platforms such as AssetAvenue, that raised $11 million in April, proves that the sector is expanding and is on its way to meeting these growth predictions.