1031 Exchangers Through JOBS ACT

1031 Crowdfunding LLC is using the principles of Title II of the JOBS Act to assist 1031 exchange investors in their exchanges by giving them multiple options to make the most out of their tax deferred real estate investments. With the advancements of crowdfunding due to the changes in the JOBS Act over the last 2 years, real estate investors have more opportunities than ever to own investment-grade, large commercial real estate.

Title II of the JOBS Act Legalizes the Advertising of private investments like a Delaware Statutory Trust (DST). Prior to September 2013, crowdfunding was considered a way to accept donations to fund a venture or pre-sell a product. With the implementation of Title II of the JOBS Act, gave companies an efficient way to successfully raise enough funds to initiate their business plans. Furthermore, it provided accredited investors a way to purchase equity through on-line platforms that could offer returns on their investments. The new law made it legal for companies to publicly advertise equity fundraising to accredited investors. Companies no longer had to have pre-existing relationships with their investors and could use the internet to reach a broader pool of investors. Accredited investors appreciated this development as well because they now had easier access to find a larger range of investment options.

Title II of the JOBS Act and Real Estate: With Title II of the JOBS Act in effect, it became possible to use on-line platforms to fund real estate acquisitions for accredited investors. Pooling funds together with other investors to acquire real estate is not a new concept, but using on-line portals to bring real estate investors together has made it more efficient and opened the opportunities to more investors. Large commercial properties that offer greater potential for higher returns are often out of the individual investor’s financial range, but can be acquired when multiple investors join together and each take partial ownership of the property. Publicly advertising these real estate investment opportunities through on-line platforms has helped investors realize that these types of investment opportunities exist and, therefore, has allowed for more investors to participate.

Due to the increase of potential real estate investors allowed by Title IV, it is expected that by the end of 2015 more than $2.5 billion will be invested in real estate through crowdfunding.

In the first year after the implementation of Title II of the JOBS Act, reports show that more than an estimated $250 million was raised through online crowdfunding. In 2014, reports show that more than $1 billion was invested in real estate alone through online crowdfunding

Title IV of the JOBS Act Introduces Crowdfunding to Non-Accredited Investors. With the implementation of Title IV of the JOBS Act in June 2015, crowdfunding made another major advancement with the allowance of non-accredited investors to participate in crowdfunded investments. Of course certain requirements and limitations apply, but for the first time the general public is able to make equity investments online.

Also called Regulation A+, Title IV of the JOBS Act allows non-accredited investors to participate in crowdfunding under two tiers of regulation. Tier I allows companies to raise up to $20 million per year from accredited and non-accredited investors and limits non-accredited investors to investments of no more than 10% of their income or net worth per year. Tier I offerings are subject to NASAA Coordinated Review by state regulators, but are not required to perform formal audits or annual reporting. Regulation A+ Tier II offerings are allowed to raise up to $50 million per year from accredited and non-accredited investors and also limit non-accredited investors to investments of no more than 10% of their income or net worth per year. Tier II offerings are not required to register with individual states, but are required to have audited financial and complete annual reporting.

Title IV of the JOBS Act and Real Estate: By qualifying non-accredited investors to participate in equity crowdfunding, Title IV of the JOBS Act increases the number of people who may take advantage of partial real estate ownership through crowdfunding. Real estate investors who do not have make more than $200,000 per year or do not have a net worth of over $1 million (who are not considered accredited investors) now have more investment options. They are no longer limited to acquiring real estate as an individual or investing in real estate funds their broker is licensed to sell. Instead they have the full variety of publicly advertised Regulation A+ offerings to consider when investing.     

Due to the increase of potential real estate investors allowed by Title IV, it is expected that by the end of 2015 more than $2.5 billion will be invested in real estate through crowdfunding.

Whether investors are seeking a replacement property for a 1031 exchange or interested in owning investment real estate for the first time, 1031 Crowdfunding has a variety of 1031 exchange qualified real estate properties currently accepting online purchases. For more information about available offerings or investing in real estate through crowdfunding visit www.1031Crowdfunding.com or call (844) 533-1031.

About 1031 Crowdfunding LLC

1031 Crowdfunding provides a range of quality properties for investors seeking a 1031 exchange through a Delaware Statutory Trust. With a compliant online investment platform, investors research opportunities, make investments with ease, and receive monthly updates. 1031 Crowdfunding was founded by Edward Fernandez along with Alfred Pizzurro, Marcus Kurschat, William Erickson and Tim Barrett, aggregating 120 years of their combined experience in the securities and real estate markets.

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