From being the youngest vice president of a New York City ad agency to creating a company that in 6 months controlled over $7,000,000 of property, Joe Fairless lives up to his Fearless Fairless nickname. He’s also the host of the popular podcast, Best Real Estate Investing Advice Ever show.
After partnering with Patch of Land on the Best Crowdfunding Crash Course Ever series, we asked Joe to let us know what he learned about the world of crowdfunding. There are three things that stood out that were really, really surprising (and valuable to know) and I hope you’ll get some value from them too.
So, here we go…
The THREE Most Surprising Things I Learned About Crowdfunding
- Qualification Criteria are Similar for Patch of Land as it is with Other Traditional Lenders.
It’s not the Wild Wild West where anything goes and you can get qualified with a wink and a smile. The qualification process is similar to what it would be for other lenders HOWEVER the speed in which Patch of Land operates comparted to traditional lenders is much faster. That put my mind at ease with the sustainability of crowdfunding in general because….
- One of the Two Items that Could Doom Crowdfunding is Bad Underwriting
The biggest influencer of adoption is word of mouth and if crowdfunding platforms get sloppy with underwriting and due diligence then they’ll not only doom their company but the entire industry will take a hit. Real estate crowdfunding is in the beginning stages of adoption and any positive or negative press will have a disproportionate affect.
Oh, and the other one? It is government policy and regulations. I’ll leave that topic to the crowdfunding and legal experts. They talk about it in detail on this episode of our series.
- All the Money Is Raised…We Just have to Find the Deal.
Sometimes I’m a bit slow and this is probably obvious to you but it wasn’t initially obvious to me. Crowdfunding platforms like Patch of Land already have investors ready and rearing to go.
All we have to do is qualify ourselves and our deal on the platform (see #1). That’s it. They’ve got the money thing taken care of. And, the special thing I learned about Patch of Land is that they prefund the loan for you so there’s no waiting around for the crowd to fund. I love that and, from a business standpoint, think that’s a very smart differentiating feature that is incredibly valuable to the borrower.
P.S. One last little treat that didn’t make the Top 3 but was surprising is that Crowdfunding…is an acronym! Yep. It stands for Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure Act. Use that as a trivia question for your next crowdfunding party (and thank AdaPia d'Errico for dropping that knowledge bomb on us).
What about you? What are some surprising things you’ve learned about crowdfunding? Leave a comment and let us know!