Jacob Blackett and Sterling White sit at the intersection of crowdfunding and residential real estate with their 6-month-old firm, Holdfolio. The 24-year-olds buy rental houses. In the coming months, they plan to bundle them and sell investors equity stakes in the portfolio through a Web-based platform. Investor returns will come in the form of rental income and gains from property sales. The company so far has few—if any—direct competitors.
Traditionally, investors in this space have needed loans or a lot of cash, as well as a property-management strategy. Holdfolio’s founders said their soon-to-launch platform will allow accredited investors to invest in real estate with as little as $5,000 while the company handles leasing and maintenance.
“We’re trying to create passive income through holdings,” said Blackett, who said he’s sold more than 500 rental properties since age 18.
“I just realized that the best way for someone to invest in real estate is not by going out and owning a piece of property themselves. The best way is to partner with successful, full-time real estate investors.”
Crowdfunding has been around for years, and returns on investment have largely come in the form of one-time rewards like T-shirts or a newly launched product.
Debt and equity crowdfunding have taken off since the 2012 JOBS Act loosened federal securities laws, and real estate firms are among the companies increasingly tapping online investor pools for financing.
Jordan Fishfeld, CEO of Chicago-based commercial real estate crowdfunding platform PeerRealty, said crowdfunding is changing how people invest in real estate and Holdfolio appears to have a good shot at success in the nascent space.