- June 1, 2016; Vol. 3, Number 6

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The Wisdom and Whimsy of Crowds: There are opportunities and hazards surrounding regulated crowdfunding platforms

by Joseph Dobrian

Since the passage of the Jumpstart Our Business Startups (JOBS) Act in 2012, various online crowdfunding platforms have emerged. At first, they allowed accredited investors to finance commercial and residential real estate deals. But as of May 16, Title III of the JOBS Act, Regulation Crowdfunding, will permit individual nonaccredited investors to put money into securities-based crowdfunding transactions, subject to various investment limits.  Opinions vary about how much of a game-changer regulation crowdfunding is likely to be, but at least in theory it will open up many new opportunities for small to medium enterprises to finance projects that large lenders would ordinarily not consider. It will also give the individual retail investor more options, particularly with regard to real estate.

REITs began the process of democratizing real estate investment more than a generation ago, allowing people who could not afford to buy an entire building to own real estate indirectly,

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