Crowdfunding isn’t just about raising capital for smart watches, giant batches of potato salad or unexpected life events. It’s increasingly an online marketplace used by real estate investors around the country. Massolution reported last April that crowdfunding platforms raised $2.7 billion for more than a million campaigns in 2012. It went on to predict, as reported by Fortune magazine, that by 2025 the global crowdfunding market would see business between $90 billion and $96 billion — two times the size of the current venture capital industry, per a 2013 study by World Bank.

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Justin Hughes

Realty Mogul, Co., Co-founder and CTO Justin Hughes likens getting in on the ground floor to people who reserved email addresses in the early ‘90s, before it became mainstream.

“Sometimes we’re rewarded for being the early adopter,” says Hughes. “If it hits, you’re front in line.”

The recovery, in part, paved the way for crowdfunding, he says. Investors wanted to deploy capital in a market without a lot of opportunities to invest. About 7 percent of the U.S. population is considered an accredited investor, says Hughes. An accredited investor is someone who is worth $1M outside of his or her primary residence.

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Nav Athwal

Last June, downtown Phoenix’s 7th and Gate Center became one of the largest commercial transactions in Arizona to be crowdfunded. Cole Value Partners brought the opportunity to online real estate investing marketplace RealtyShares, which underwrote it and then listed it for funding on its online platform. It takes only minutes for a registered investor to complete the funding process once he or she reviews the opportunity information, says Nav Athwal, co-founder and CEO of RealtyShares. It took a little over a week to raise $750,000 for 7th and Gate Center.

“Investors are no longer restricted to investing only in their backyard and can instead passively invest with a qualified real estate sponsor in markets that otherwise would not be accessible,” says Athwal. RealtyShares is especially bullish on regions with population and job growth or a lack of cap rate or valuation compression, such as Dallas, Seattle, Chicago, Portland and Phoenix.

“Phoenix is especially attractive for office and retail assets due to an improving job market, which is contributing to reduced vacancy rates,” he says.