A new tactic is being used in West Michigan to finance rental properties, and it is one that many people may be familiar with by now: Crowdfunding. The popular tactic has been used for many other types of projects, but a new site that is being launched is aimed at letting people invest their money directly into real estate projects in Michigan, offering them returns on that investment in the future.

The first transaction is going to involve Leonard Oaks Apartments. This is an apartment complex with a total of 72 different units. An agreement has been reached to sell the place for $2.85 million, but the executives who have the agreement are hoping to get as much as $1.4 million through their crowdfunding website, which they are now launching. If it works out, they also hope to take on more projects like this in the future.

Reportedly, someone can buy into the apartment complex online with only $5,000.

Among other reasons, the executives said that this is a good chance for investors because the economy is rebounding in Michigan. They noted that there is now more manufacturing and that unemployment rates are dropping, both of which they hope will increase the value of real estate and provide renters.

This may well be a new way to buy commercial real estate, and it will be an interesting story to watch going forward, as it could draw attention to how real estate laws apply to investors who may be coming in with very little overall capital. Crowdfunding is typically aimed at getting a little money from a lot of people, and the investment and ownership rights of these individuals would have to be upheld, especially if the value changes or the property is later sold.

Source: MLive, “Crowdfunding’ platform created to fund West Michigan real estate investments“, June 30, 2014

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