August 6th, 2014
As more consumers are having trouble saving the funds necessary for a home down payment, many are turning to anonymous investors for the money they need.
Crowdsourcing or crowdfunding, which involves a large number of individuals making a small investment toward an entrepreneurial or other project via a website such as Kickstarter or Indiegogo, is being used by would-be homeowners who want nonconventional down payment assistance. Inman News reported that several websites have appeared to help consumers fund their real estate ventures, including purchases for personal use.
When this trend first hit the market, it was particularly popular among those who wanted to get a start in real estate investing. Where this practice traditionally required a large amount of capital and was often seen as an interest of high net worth individuals, crowdsourcing gave a number of new investors the startup cash they required. In some cases, the hundreds to sometimes thousands of investors were guaranteed a cut of rental or other income once the property started generating a return, but these fees were minimal compared to the possible profits.
Now, consumers who are looking for a new home to start a family are also able to reap these benefits through the help of generous strangers and family members.
Crowdsourcing a first home as newlyweds
Inman News said sites like Feather the Nest, DownPaymentDreams.com and Hatch My House are among the choices consumers can turn to for down payment assistance. Feather the Nest in particular caters to real estate ventures tied to special occasions such as weddings.
Lindsay Oparowski, CEO of Feather the Nest, told the source that a couple’s crowdsourcing page could complement traditional gift registries or replace them altogether. The newlyweds can get the home they want, and guests don’t have to hunt through a registry to find a gift that hasn’t been bought already. There are also the contributions from generous strangers who come across the couple’s campaign.
“In this generation, so many people are wanting to buy a house and they already have furnishings and towels and pots and pans and things like that,” Teresa Krebs, a Wilmington, North Carolina-based real estate agent who launched DownPaymentDreams.com, told Inman News. “Among my group of friends, that’s what people really wanted for a wedding gift – cash for a down payment.”