Crowdfunding Real Estate Under the JOBS Act
Crowdfunding has long been pitched as a game-changer for raising private capital—opening the door for everyday investors to participate in opportunities once reserved for institutions. But how much of that promise has actually held up?
In a recent episode, crowdfunding attorney Mark Roderick cuts through the noise to explain how the JOBS Act has really reshaped the landscape—and what real estate sponsors need to know before choosing a path.
The Three Paths to Crowdfunding
Not all crowdfunding is created equal. Mark breaks down the three primary frameworks:
- Regulation Crowdfunding (Reg CF) – Designed to allow non-accredited (“mom and pop”) investors to participate in deals.
- Rule 506(c) – Allows sponsors to publicly market offerings, but limits investors to accredited individuals.
- Regulation A (Reg A) – A more complex, mini-public offering that can reach a broader audience but comes with heavier compliance requirements.
While each option has its place, their real-world performance has been far from equal.
Accredited vs. Non-Accredited Investors: Why It Matters
One of the biggest distinctions in crowdfunding comes down to who you’re raising money from.
- Accredited investors (high-net-worth individuals) bring larger check sizes and fewer regulatory hurdles.
- Non-accredited investors expand your audience—but significantly increase compliance, cost, and complexity.
This trade-off is at the heart of why certain crowdfunding models have struggled to scale.
Why 506(c) Is Winning
According to Mark, Rule 506(c) has emerged as the clear leader—especially in real estate.
Why?
- Ability to advertise and market deals publicly
- Access to larger pools of capital from accredited investors
- More efficient fundraising with fewer administrative burdens
For many sponsors, it strikes the right balance between flexibility and scalability—making it the current “gold standard.”
The Reality Check on Reg CF
Reg CF was initially celebrated as a way to democratize investing—but in practice, it hasn’t fully delivered.
Challenges include:
- Smaller individual investment amounts
- Higher operational and compliance costs
- Platform dependency and investor management complexity
The result? Many deals struggle to raise meaningful capital at scale, making Reg CF less practical for larger real estate projects.
Does Your Deal Justify Crowdfunding?
Before jumping in, sponsors need to ask a critical question: Is the deal big enough to support the cost and effort?
Crowdfunding isn’t free. Legal, compliance, and marketing expenses can quickly add up—especially for Reg CF and Reg A offerings.
For smaller deals, traditional private capital or relationship-based fundraising may still be the smarter path.
Final Takeaway
Crowdfunding can be a powerful tool—but only when used strategically.
Today, the market is showing a clear trend:
- 506(c) dominates for efficiency and scalability
- Reg CF remains limited despite its original promise
- Reg A works—but only for the right size and structure
For real estate sponsors, success isn’t about choosing the most accessible option—it’s about choosing the one that actually works.
For a deeper dive into Reg CF, 506(c), and Reg A—and what’s truly working in today’s market—listen to the full episode featuring Mark Roderick.
Questions? Let me know.
Markley S. Roderick
Lex Nova Law
10 East Stow Road, Suite 250, Marlton, NJ 08053
P: 856.382.8402 | E: mroderick@lexnovalaw.com
