Patch of Land
| Company type | Online Real Estate Crowdfunding |
|---|---|
| Founded | 2012 |
| Headquarters | Los Angeles, CA , US |
| Website | www.patchofland.com |
Patch of Land is an online peer-to-peer or 'peer-to-professional' Real Estate Crowdfunding marketplace that connects professional real-estate developers needing to finance their real-estate projects to willing lenders or real-estate investors. Patch of Land focuses uniquely on relatively short-term (typically 6-24 months) real-estate debt or fixed-income loans (as opposed to real-estate equity investments) and, like a mortgage, all their debt-investments are fully secured via first lien by the underlying real-estate property, as well as a personal pledge by the borrower.
History
Patch of Land brought real-estate bridge financing, also sometimes known as "hard money lending," nationwide and online. In hard-money or real-estate bridge financing, a loan is both secured-by and determined-by the value and quality of the underlying property rather than [exclusively] by the creditworthiness of the borrower, as with more conventional lending. Real estate bridge-financing has historically been an inefficient, offline, hyper-local market where lenders must personally know who the best local real-estate developers are, and which tracts of land, parcels, buildings, properties, streets or neighborhoods offer the most promise for price stability and appreciation. Conversely, real-estate developers needing funds for their projects were historically forced to seek-out and pursue local financiers, magnates, bankers or capitalists rather than spend time doing what they know best: construction & renovation.
Patch of Land and other online real-estate crowdfunding pioneers enabled real-estate developers to focus their time and effort on identifying real-estate opportunities, building, renovation, and construction rather than compiling paper loan-documents or foraging for willing lenders. At the same time, Patch of Land also enabled accredited investors wishing to invest in real-estate as an asset-class (as opposed to as one's primary home) without needing a prohibitive amount of freely available investible funds. Due to current SEC Regulations, Real-estate Crowdfunding is not yet openly or easily available[1] to retail investors[2]
Patch of Land was initially established by Jason Fritton, Brian Fritton and Carlo Tabibi in 2012 in Los Angeles, California shortly after congressional passage of the United States JOBS Act making it one of the earliest providers of online Real-Estate Crowdfunding.[3] Jason Fritton of Patch of Land was among those who lobbied the US Congress for the inclusion of real-estate crowdfunding in the final draft of the JOBS Act[4]
In August 2016, as the company expanded, Patch of Land hired Paul Deitch from Oaktree Management as CEO[5]
Unique aspects
Patch of Land is considered by those in the real estate investment industry to have established many of the practices which are now common in real-estate crowdfunding.
Patch of Land was the first to pre-fund the loans it offered[6] benefiting investors as their funds began immediately accruing interest, as well as borrowers, who could access all borrowed funds immediately without needing to wait for investors to sign on. Patch of Land was also one of the first to co-invest in its property loans alongside the investors on its platform[7], as a testament to their confidence in each deal they underwrite.
In the summer of 2015[8], Patch of Land dramatically lowered the credit risk of real-estate crowdfunding when it announced its Indentured Trustee Investment Model[9], offering a bankruptcy-remote investment structure and better consumer protections for its investors.
Though no other real-estate investment firms were offering such a model at the time[10], Patch of Land opened its Indentured Trustee Model documentation to the public[11] in the hopes that other firms would follow suit[12], as many did.
In May 2015, Patch of Land made history by announcing the largest ever real-estate investment loan offering of $1,900,000 to be fully crowdfunded (via regulation 506c ) as of that date.[13]
In 2015, CNBC created its Crowdfunding Index and included Patch of Land in both the Real-Estate sub-sector as well as the overarching Crowdfinancing sector[14]
Funding
Patch of Land's first major outside investment came in 2014 from Smart Street Ventures, a subsidiary of Tactical Group Holdings. Thereafter, Patch of Land became the first Real-Estate CrowdFunding firm to crowdfund itself[15] via the Seedinvest equity fund-raising platform.
Patch of Land made headlines in 2015 when it subsequently raised a record (for real-estate crowdfunding companies at the time) $23.6 Million in institutional financing[16] led by SF Capital of New York, as well as an investment from Ron Suber, president of Prosper.com marketplace.
References, Citations
- ^ "SEC Compliance a Must for Real Estate Crowdfunding Companies (with images) · JohnnyChang". Storify. Retrieved 2017-03-31.
- ^ "The Definitive Guide to Real Estate Crowdfunding". Retrieved 2017-03-31.
- ^ "Patch of Land Raises $23.6 Million in Financing, Led by SF Capital Group and Ron Suber". www.businesswire.com. Retrieved 2017-03-30.
- ^ equities.com. "Crowdfunding Comes to Real Estate: Interview with Patch of Land CEO Jason Fritton". Equities.com. Retrieved 2017-03-30.
- ^ "Change at the Top: Paul Deitch of Oaktree Capital Steps in as CEO of Patch of Land". Crowdfund Insider. 2016-04-25. Retrieved 2017-03-31.
- ^ Stoller, Bill (1969-12-31). "LendingClub (NYSE:LC) - Exclusive: Patch Of Land Fintech Sprouts Growth Through Real Estate Crowdfunding". Benzinga. Retrieved 2017-03-30.
- ^ "A Quarter Billion Institutional Credit Will Not Deter Patch of Land's Commitment to the Crowd". Crowdfund Insider. 2016-02-17. Retrieved 2017-03-30.
- ^ "Patch of Land Announces All Existing and Future Loans Secured by Underlying Collateral as Part of New Loan Structure Offering". pol.newswire.com. Retrieved 2017-03-30.
- ^ "The Real Estate Crowdfunding Review". The Real Estate Crowdfunding Review. Retrieved 2017-03-30.
- ^ "Improved RECfunding Investor Protection at Patch of LandInfo Dir Web | Info Dir Web". infodirweb.com. Retrieved 2017-03-30.
- ^ Land, Patch of. "Patch of Land New Offering Structure". go.patchofland.com. Retrieved 2017-03-31.
- ^ Zerucha, +Tony (2015-08-21). "Patch of Land announces loan collateral changes". Bankless Times. Retrieved 2017-03-30.
- ^ "Patch of Land Makes History By Closing Largest Residential 506c Crowdfunded Loan to Date". Crowdfund Insider. 2015-05-28. Retrieved 2017-03-30.
- ^ staff, CNBC com (2015-02-04). "The CNBC Crowdfinance Real Estate Average". CNBC. Retrieved 2017-03-30.
- ^ "Patch of Land Announces Public Fundraising on SeedInvest: CEOs Jason Fritton and Ryan Feit Comment". Crowdfund Insider. 2014-10-16. Retrieved 2017-03-31.
- ^ "Patch of Land Raises $23.6 Million for Real Estate Platform. SF Capital & Ron Suber Lead Round". Crowdfund Insider. 2015-04-08. Retrieved 2017-03-30.