Golden Pacific, a California-based asset management company, has turned to crowdfunding to raise the $10M capital for residential properties in Kansas City. The company had already raised $3M and is now going to raise the remainder through Crowdflipr, a Sarasota, Fla-based crowdfunding portal. It is planning to invest approximately $25 million to acquire, revamp and manage approximately 200 distressed homes in Kansas City.
Only accredited investors, those with a minimum annual income of $200,000 or a net worth of $1 million excluding private residence, are allowed to participate in the deal. The minimum amount that an investor can invest in the deal is $25,000. The projected net annual internal rate of return is 16 – 20 percent over a holding period of 6 to 8 years. After that period, individual homes shall be sold to the occupants or large institutional investors.
Property crowdfunding came into effect in 2012 during after the Jumpstart Our Business Startups (JOBS) Act was signed into law by President Obama. Several regulations of the act have since been adopted by the Securities and Exchange Commission (SEC) and include Title II, Title III, Title IV and Regulation A. This has largely disrupted the real estate investing industry so that both accredited and non-accredited investors now have opportunities to diversify their property investment portfolios, create wealth and build communities. With the JOBS Act, non-accredited investors can invest as little as $100 or be allowed to participate in deals of as much as $50 million provided they do not invest over 10 percent of their net worth or annual income.
Golden Pacific Capital chose to invest in Kansas City because the area has hotter residential markets whereas Las Vegas, Southern California and Miami are still lagging behind despite the home property price appreciation. In addition, institutional buyers in Kansas City offer less residential market competition. Therefore there are numerous chances for the company to thrive in the area. Majority of the residents of Kansas City have been unable to participate in property crowdfunding over the years because they did not have very deep pockets, but now they will be able to do so via crowdfunding. Golden Pacific is dedicated to providing them with this opportunity.
Featured Image: Kansas City