Commercial and Equity Will Hit the Crowd

IRVINE, CA—Crowdfunding is expanding into more areas of the CRE arena, Shea Pallante, SVP of residential lending for Realty Mogul's newly launched Irvine office, tells GlobeSt.com exclusively. We spoke with Pallente following the announcement of the launch about its timing, his goals and how residential lending fits in with crowdfunding.

GlobeSt.com: Why is now the right time for Realty Mogul to open an Irvine office?

Pallante: I joined the company because I see it as a huge opportunity in the marketplace for this type of lending. It's more of a sleeping giant to where we're joining borrowers and their properties and the investment opportunities they find with investors who want to invest in a single loan—not a pool of loans—and not have all their money tied into one loan. They can diversify their portfolio. Opening the Irvine office taps into the amazing challenge Orange County has to offer as the mortgage capital of the world. That's one piece, and just having an office dedicated to the residential side of lending to this crowdfunding space is a huge focus. I see a huge opportunity there. This office will actually hold 35 to 40 people, and there are currently seven staff members, so we're looking to add substantially more in this next quarter.

GlobeSt.com: What are your goals in this new position?

Pallante: My goals are to ramp up production. We have a lot of traffic driven to our website just from the name of the company alone and through all the conferences we've been attending. We're looking to expand our marketing efforts. Our goal is to increase the staff, to feed the beast. We have a lot of supply coming through, so the goal is to ramp up the staff to increase production. My goal in the next three to six months is to have the office fully staffed with residential production and operations.

GlobeSt.com: How does residential lending fit in with crowdfunding platforms, which we've more typically seen focus on other real estate sectors?

Pallante: Our crowdfunding platform in residential is essentially connecting a lot of distressed houses that need rehab and don't qualify for conventional or FHA financing with the financing they need. We'll take those investment opportunities that people find on the ground level and essentially just connect them with investors in the crowd who are looking for certain returns. It's more of a fix-and-flip-type transaction. The returns you see on fix-and-flip transactions are more in line with what the flipping crowd is looking for.

GlobeSt.com: How do you see crowdfunding affecting the real estate market next?

Pallante: At Realty Mogul, we also do commercial and equity, so those will all be hitting the crowd as well. What the crowd likes about doing a commercial or residential loan is you're getting a return while it's tied to collateral, which is huge for them. As far as the other parts of the market, I'm not sure. I see it spreading into other areas, and the fact that you can spread your risk, that you can have a portion of one loan and a portion of another loan is attractive to the crowd.