Investors across the country just bought a Modesto apartment complex. How? Crowdfunding
Short films, record releases and new products aren’t the only things that get crowdfunded these days. Investors from across the country recently pooled $17.75 million in capital to invest in Trails at 2112, a 97-unit multifamily complex on Floyd Avenue in Modesto.
The investors went through RealtyMogul, an online crowdfunding realty investment site. The site has a network of over 200,000 investors across a $3.7 billion portfolio of properties that includes over 18,000 multifamily units.
CEO Jilliene Helman said RealtyMogul is working closely with Valiance Capital, a Berkeley-based capital management firm, on the Trails at 2112 project, with RealtyMogul’s investors raising the remainder of the equity capital. According to RealtyMogul, this project is the first crowdfunded property acquisition in Modesto, and interest was so high the site had to limit the number of investors.
Crowdfunding in real estate has become more common in the past decade. According to US News and World Report, real estate investors were limited to owning property outright, or buying publicly traded real estate investment trusts (REITs) before 2013, when the Jumpstart Our Business Startups Act went into effect.
Since then, a number of crowdfunding platforms have emerged, allowing investors to pool their money and buy multifamily units, commercial property or bundles of single-family homes. Crowdfunding significantly lowers the barrier to entry for real estate investment, and RealtyMogul is now among a number of well-known real estate crowdfunding sites, according to NerdWallet.
Helman said the Floyd Avenue property’s units and amenities will be gradually renovated, adding a higher rental value to the individual apartments.
She added that the majority of her site’s investors have yearly incomes above $200,000, or net worths of over $1 million, and are located all across the country. She said the high level of interest in the Modesto project speaks to the growing strength of the local real estate market.
“We allow investors all over the country to access real estate projects all across the country through our digital platform,” she said. “Modesto’s been a resilient market. ... There’s still a desire for affordable housing in California, and Modesto has been one of the (cities to) benefit from the flight to suburbia.”
Helman said RealtyMogul and the crowdfunding model can help real estate firms raise capital on projects they might otherwise not be able to fully finance, thus opening up more properties across the country. With Trails at 2112, the investors are making the renovation of a 40-year-old property possible, increasing the value of each unit and providing tenants with more amenities.
“It’s really helping to keep the housing stock in good form,” she said.
While RealtyMogul currently doesn’t have other active properties in Modesto, Helman said her team’s “eyes are always open.”
This story has been updated to correct how much money investors raised for the Trails at 2112 complex.
‘This story was produced with financial support from the Stanislaus Community Foundation, along with the GroundTruth Project’s Report for America initiative. The Modesto Bee maintains full editorial control of this work.
To help fund The Bee’s economic development reporter with Report for America, go to https://bit.ly/ModestoBeeRFA
This story was originally published October 4, 2021 at 6:00 AM.
