You can crowdfund nearly everything now, from the latest tech invention to surgery costs; crowdfunding is the way to go to quickly raise funds. Could you potentially crowdfund a house? Certainly. What about crowdfunding the equity in a home? Would you believe the answer here is yes as well?
Clients may soon be asking about the new platform dwellxchange. The new platform makes it possible to access and sell equity in a way we’ve never seen before.
An alternative to home equity loans
Dwellxchange is the first platform of its kind aimed at connecting homeowners who want to draw equity from their homes and sell directly to investors. This new system provides an alternative to home equity loans and cash-out refinancing, which are often expensive and time-consuming.
Dwellxchange provides the method to homeowners looking to sell their equity to a third-party investor using crowdfunding by providing access to retail, institutional, and accredited investors while remaining in their property and eliminating their monthly housing expense.
Homeowners retain occupancy rights, as well as potentially eliminate debt.
Investors share in upside equity appreciation
Investors will realize a return through equity appreciation, realized through the sale of a home, or by using the Dwellxchange marketplace to exit an investment. Investors will also share in upside equity appreciation.
The property is still managed and owned by the resident, leaving the investor with little cost. Investors can purchase an entire position, or share the equity interest with several other investors through a syndicate.
The appeal of a platform like this
HuffPo’s Scott Yancey touched on the appeal a crowdfunding platform like dwellxchange will have: “Real estate investors spend a lot of time, effort and money trying to reach homeowners through marketing channels, and it works to some extent.”
“However,” Yancey added, “direct crowdfunding connection of owners and investors definitely has advantages: the fewer middle-people in the process, the better for Return on Investment.”
Yancey notes, “the homeowner who goes to the trouble to register with this crowdfunding site is not someone the investor must convince to sell. They simply need to agree on the equity stake and the price.”
Of course, use with caution
Dwellxchange is not only the new kid on the block, but also the only kid on the block at the moment, so using the platform is a calculated risk.
While it does offer a great way for homeowners to tap into their equity without incurring any more immediate expenses, it is not fail-proof. As with any transaction, things could fall apart, or you may not receive the amount of equity you expect. As with anything else that is new, please use with caution.