RG 088 – Disrupting Commercial Real Estate Lending with CrowdStreet with Ian Formigle

About Ian

• Ian is the VP of investments at CrowdStreet.com
• He’s a RE private equity professional with over 20 years experience
• Since joining Crowdstreet he’s completed 125 offerings – $3.7billion in project value

Nuts and Bolts

Ian Formigle is the Vice President of Investments at Crowdstreet. He’s a real estate private equity professional and has 20 years experience in the real estate sector. He started his career as a derivatives trader and in the early 2000’s he was working on the market floor trading. As this process started to move away from the floor and onto the internet Ian realised that it was time to find a next challenge. He shifted towards real estate and made his first dollars in single family homes in 2002 and flipped them in 2005. He bought some multifamily properties with the money he made and was left with some assets in the 2008 crash. He points out that most people don’t move in a market downturn and so he managed to stay above water with the remaining multifamilies that he had and sold them in 2013. He took his capital and reinvested it into a private equity group and into starting Crowdstreet.

Crowdstreet is the brain child of cofounder Darren Powderly, a commercial real estate broker who in 2012 saw inefficient investment structures during the downturn. In this he saw an opportunity to create a solution. The downturn was caused because the control was in the hands of a few but he wanted to spread the control more thinly and broadly into a more sustainable model for the future. When the title 2 jobs act went through this allowed the Crowdstreet market to become a reality. This was because the jobs act allowed general solicitation and advertising of private Reg D offerings. Crowdstreet is a piece of software that any commercial real estate operator in the country can license to manage their own investor bases. It’s the private real estate investor equivalent of an Amazon Marketplace where you can meet other sellers as well. The software was launched in 2015 and now has over 100 companies licensing. As an investor you can link to the software through your website and it will look like your own website but will actually be hosted on the Crowdstreet servers.

Ian markets the platform online and the number one contributor is organic searches, however Crowdstreet is also very active on social media. Facebook is the best for leveraging new users with targeted ads. They have grown their sponsor base organically over the last 2 years by offering them coaching on getting their work online. As an investor you can look at deals and begin investing with no fees as the fees are paid by the sponsor and become a deal cost, like a legal cost. The sponsor is charged a fee for a single transaction and then they can upgrade to become subscribers with annual subs from $8000 although this depends on the size of the sponsors enterprise. Fees cost 3% of capital and a yearly fee for managing investors which lasts the lifetime of the investor.

Top tips

• Most important habit – Making sure things get done each day
• Most influential person – Bob Scanlon and Tyler Gooding
• Most important tool – The Crowdstreet software
• Most important failure – Investing in 2 properties in Oklahoma catering for students and then losing the monopoly on students and losing all the value of the properties
• Contact – crowdstreet.com