Regulation Crowdfunding and Real Estate: The $5 Million Route
Regulation Crowdfunding, written as Reg CF, is the US exemption built for small public raises through a licensed online portal. An issuer can take up to $5 million in a year from anyone, accredited or not, provided the sale runs through a funding portal or broker-dealer and the issuer files a Form C. It is the exemption people assume fractional real estate uses, and almost none of the platforms Threeworld lists do. This page explains what a Reg CF real estate security is, why the structure suits a single development more than a rental portfolio, who may buy and how much, the twelve-month resale restriction, and how to read a Form C if you meet one.
Who uses this structure on Threeworld
No platform listed on Threeworld sells under this structure today. The page is here so you can recognise it when a platform does.
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What You Actually Own
A Regulation Crowdfunding real estate offering sells a security in one project company: common or preferred shares, LLC membership units, a revenue-share note or a straight loan. The issuer is usually a developer or a sponsor raising part of the equity or mezzanine debt for a single building, and the crowd sits alongside a bank and the sponsor's own money. You own a claim on that company, not on the property, and the company's operating agreement sets your rights. Since the 2021 amendments an issuer may also sell through a special purpose vehicle that holds the crowd's position as one line on the cap table. The SPV is a conduit with no business of its own, so your economics pass through, but your vote and your information rights are whatever the SPV agreement gives you.
How the Exemption Works
Reg CF came out of the 2012 JOBS Act and went live in 2016. The SEC raised its cap from $1.07 million to $5 million in any twelve-month period in amendments adopted in November 2020 and effective in early 2021, the change that made the exemption usable for a building rather than a coffee shop. Every sale must run through an intermediary registered with the SEC and a member of FINRA, either a broker-dealer or a funding portal. The portal hosts the offering, runs background checks on the issuer's officers, provides educational materials and the channel where investors can question the issuer in public. The issuer files Form C on EDGAR before launch, updates it with Form C-U when the raise closes, and files an annual report on Form C-AR for as long as it has investors or until it qualifies to stop. Financial disclosure scales with the raise: self-certified statements for the smallest offerings, reviewed by an independent accountant in the middle band, audited above $1.235 million for an issuer that has used Reg CF before. The SEC reviews nothing. The portal's checks and the public question thread are the scrutiny.
Who Can Buy and How Much
Anyone may invest. Since 2021 accredited investors face no limit. Non-accredited investors are capped across all Reg CF offerings in a twelve-month period: if either annual income or net worth is below $124,000, the limit is the greater of $2,500 or 5% of the greater of the two, and if both are at or above that figure, the limit is 10% of the greater, up to $124,000 in total. The portal is responsible for tracking the limit, which in practice means a self-certification at checkout. There is no residency restriction in the rule, though portals set their own onboarding, and most require a US bank account.
The Twelve-Month Restriction
Securities bought under Reg CF cannot be transferred for one year from purchase, except back to the issuer, to an accredited investor, as part of a registered offering, or to a family member or trust. After the year the restriction lifts, but no exemption creates a market, and funding portals are not allowed to run one. A few broker-dealer platforms operate alternative trading systems where Reg CF securities can list, and for most real estate issuers no such listing exists. So the realistic exit is the project's own: a refinancing or sale that returns capital, on the sponsor's timetable. A Reg CF real estate security is a hold-to-completion instrument whatever its name.
Why Fractional Platforms Rarely Use It
No platform Threeworld lists sells under Regulation Crowdfunding today. The reasons are structural. The $5 million cap is per issuer per year, so a platform buying a home a week cannot stack series under it the way Arrived and Collab stack series under Regulation A+. Every offering must run through a FINRA-registered portal with its own fees and public question channel, which suits a developer raising once and not a marketplace listing continuously. And the non-accredited caps are tighter than Regulation A+'s 10% per offering. Where Reg CF appears in property it is in single-asset syndications and small developments, often as debt. If you meet a fractional platform claiming Reg CF for a rolling catalogue of rentals, the question is which issuer and which Form C each listing belongs to.
What to Check Before You Buy
Find the Form C on EDGAR and confirm the issuer's name matches the entity on your subscription agreement. Check which intermediary hosts the offering and look it up on FINRA's register. An offering not run through a registered portal or broker-dealer is not a Reg CF offering. Read the financial statements and note whether they are self-certified, reviewed or audited. The raise size tells you which to expect. Find the target amount, the maximum, and the deadline. If the target is not met by the deadline, your money comes back and the deal does not happen. Read the question thread on the portal. The issuer's answers are part of the record. Count twelve months from your purchase and ask what exit exists after it, because the exemption provides none.
Questions people ask
Can you use Regulation Crowdfunding for real estate?
- Yes. A developer or sponsor can raise up to $5 million in a twelve-month period from any investor through a FINRA-registered funding portal, filing a Form C. It is used for single projects and small developments far more than for fractional rental platforms, none of which on Threeworld use it today.
How much can a non-accredited investor put into Reg CF?
- If annual income or net worth is below $124,000, the greater of $2,500 or 5% of the greater figure across all Reg CF offerings in a year. If both are at or above $124,000, 10% of the greater, capped at $124,000. Accredited investors have no limit.
Can I sell Regulation Crowdfunding shares?
- Not for twelve months, except back to the issuer, to an accredited investor, in a registered offering or to family. After that there is no restriction and usually no market, since funding portals may not run one, so the practical exit is the project's own refinancing or sale.
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