Patch of Land is a real estate crowdfunding platform founded in October 2013 by Jason and Brian Fritton.
This peer-to-peer lending marketplace allows accredited investors to make good returns while taking advantage of the latest technology and crowdfunding exemptions under the JOBS Act.
Patch of Land makes it easy for borrowers to get funding for projects that might otherwise be rejected by banks and other traditional funding methods.
Already, the platform has become well-known for its innovativeness. Patch of Land was the first real estate crowdfunding platform to offer pre-funded loans, for one. According to a post by Crowdfund Insider:
“PoL’s prefunding philosophy helps their developers secure good investment opportunities and to begin rehabilitation with less delay. After proper due diligence, they commit to prefund loans with an internal credit line, enabling closings in as little as 5 days.”
The three different types of real estate investment opportunities that can be found on Patch of Land include single family residential (57%), commercial (4%) and multi-family residential (37%) projects.
Get the 2015 Real Estate Crowdfunding Report for more detailed statistics.
Below is a brief guide to investing and borrowing on Patch of Land, along with some additional resources if you want to learn more about real estate crowdfunding:
Guide for Borrowers
1. Apply for a Loan
Borrowers must complete a 5 minute loan application to start the process of raising funds on Patch of Land. This application includes basic background information and details about your project that will help the Patch of Land team familiarize themselves with your needs.
2. Approval Process
Once the application is complete, a representative from Patch of Land will contact you to get more details about your project. This is a great chance to ask any questions and find out whether Patch of Land is the best fit for your campaign. Next, borrowers fill out standard paperwork with personal, property and loan details and Patch of Land begins its due diligence process.
3. Get Prefunded
Once your loan is approved it can take up to seven days to receive your funding. Their developer information page states that:
“Since Patch of Land prefunds your loan first, you can begin your project immediately, without delay. For fun, we invite you to sit back and relax as you watch your loan get funded on our platform by our online investors. We have some loans that get funded within the first hour of being posted on our website!”
This method of funding projects is also beneficial for lenders, because it means that they can start earning interest on their investments sooner.
4. Keep Investors Updated and Make Monthly Payments
Patch of Land provides term loans where you make automatic monthly interest payments. While your project is being completed, the platform will ask you for updates that they can share with investors to help keep them in the loop.
Guide for Investors
1. Sign Up
Signing up as an investor on Patch of Land takes only 30 seconds and there is no commitment involved! Once you are a member, you can easily search through pre-vetted real estate opportunities and use the platform’s various resources including portfolio management tools.
2. Invest
When you find a project you would like to invest in, simply click the “I’m Ready to Invest” button and enter your funding amount. On Patch of Land, Investor Agreements are signed electronically (and securely); the process of looking over legal documents and completing your investment only takes about 10 minutes.
3. Earn Up To 12%
Once you have invested you start to earn monthly interest payments and get to find out how the project you invested in is doing. When the project is complete the borrower repays the loan, which you can choose to withdraw or re-invest!
Real Estate Crowdfunding Education
Patch of Land has begun hosting a monthly Real Estate Crowdfunding Webinar. The goal of this webinar is to educate the traditional real estate financing industry on how crowdfunding can be used to their advantage.
The webinars are being held on the third Wednesday of every month at 5:00 PST / 6:00 MST / 7:00 CST / 8:00 EST. Each episode covers topics such as real estate crowdfunding in Chicago, how equity and debt crowdfunding have paved the way for real estate crowdfunding, reviewing Patch of Land case studies and more! These webinars are interactive, meaning that listeners have the opportunity to ask questions throughout the webinar.
If you would like to see any of the episodes that you missed, you can find them all on the Patch of Land YouTube Channel.
Conclusion
Since they launched almost two years ago, Patch of Land has already funded 151 loans. Borrowers have raised over $53 million in total and over $10 million in funds have been returned to investors so far. The average loan size on Patch of Land is $355,391.
It is clear that Patch of Land has attracted a lot of attention in the real estate crowdfunding world, especially in the last year. In April 2015, they announced a $23.6 million Series ‘A’ funding round which suggests that fans of the platform can expect more improvements to come.
For more statistics on how real estate crowdfunding is growing, check out this report which covers the industry’s development in 2015.
