RealCrowd

When RealCrowd CEO Adam Hooper met his future business partner Roman Rosario, the mood was tense. The two were working for competing real estate brokerage firms at the time, and both were trying to close the same deal.

“It wasn’t the rosiest of starts,” Hooper says with a laugh.

“Hey,” Rosario says. “I think I was very cordial.”

Fast-forward a few years, and the former rivals became co-workers when Hooper joined the ranks alongside Rosario at Palmer Capital.

When they left to start RealCrowd in early 2013, they took 20 years and $3-billion worth of underwriting and transaction experience with them. Now, along with CTO JD Conley and CSA Andy Norborg, they’re using their expertise to make high-performing, high-level real estate investing available to everyone.

“We’ve sat on the sidelines and made people — these institutions we worked for — hundreds of millions of dollars by working on these deals, but we could never invest personally,” Hooper says. “To have the opportunity to invest personally in these deals, and give that same opportunity to accredited investors across the country, that’s a pretty cool thing.”

How RealCrowd Works

Users can browse potential properties on the RealCrowd site and, when they see something they like, click "invest" and decide how much they’d like to chip in. Investments start at $5,000.

The entire process is transparent, and users can review a range of documents — including due diligence items, financial information, draft operating agreements, etc. — before making any decisions.

Once enough people pledge their support to fund an asset, RealCrowd coordinates the necessary documentation, investors send their payments directly to the real estate operator, and the deal is done.

Meanwhile, investors manage their portfolios using the RealCrowd dashboard, which tracks tenancy, appreciation, and net cash-flow distributions (made quarterly), among other things.

From D’Oh! to Aha!

RealCrowd was born in a conference room on a particularly frustrating afternoon as Hooper and Rosario were working on a deal that was big enough to be good, but too small for institutional investors to care.

“The building had all around good metrics, quality tenants, long term leases, those type of things — but we were having a hard time selling it,” Rosario recalls. “There are good deals out there that are too small for institutional investors to be interested in, and are too big for most individuals to invest in.”

It’s in this middle market — the $2-to-$15-million market — that RealCrowd can really shine. “We’re in this sweet spot where we don’t get a lot of competition from the institutions,” Hooper says.

He and Rosario knew several people who would have loved to invest relatively small amounts — $10,000 here, $50,000 there, maybe $100,000 — in the opportunity that was on the conference room table that fateful day, but they had no way of doing it. There was just no way to bring all those people together in an efficient way.

Then it dawned on them: Technology could do just that, and bring everyone together to form a sophisticated, efficient real estate syndicate.

“Real estate is one of the last financial markets to be fundamentally disrupted through technology,” Hooper says. “We can take an industry standard method that really hasn’t been changed in 30 or 40 years, apply a massive amount of technology to it, and, in making it efficient enough, open it up to all of these investors that would love to do it, but don’t have access.”

Game On

The recent elimination of the decades-long ban on advertising and soliciting real estate investments was a game-changer in the world of real estate investing.

“The lift on the ban of general solicitation is a reallocation of opportunity,” Rosario says. “It was one of the primary reasons, we felt, that the rich were getting richer.”

With the ban lifted, real estate investment deals no longer have to go through pre-established relationships — so-called “internal country club networks” — and RealCrowd can make its investment opportunities available for everyone to see.

Investors still need to be accredited — that is, make $200,000 (single) or $300,000 (joint), or have a net worth of $1 million excluding their primary residence — but that could soon change, too, to accommodate a broader range of investors.

“This is an asset class that’s historically only been accessible to the ultra, ultra, high net worth individuals and institutions, and we’re breaking that barrier down and providing access to the everyman investor,” Hooper says. “There’s no reason that these deals should be reserved for only institutions and ultra high net worth individuals; they should be available for everybody. I think that’s ultimately at the root of what we’re up to.”