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Commercial real estate has long been an investment opportunity available to a rare few and also only attractive to a relatively narrow investment pool. New types of financing, however, are putting commercial investment not only within reach of a broader pool of investors but also making them more attractive to a wider range of investors. Here are three types of alternative funding that are helping change the commercial real estate landscape.

Credit Unions

Commercial real estate (CRE) loans tend to be much larger than other types of traditional loans, which creates too much exposure for smaller banks and credit unions. Recently, however, credit unions have been banding together to pool their resources. This allows them to offer larger loans (with larger returns) while still limiting their individual exposure. In addition to forays into the world of CRE, they are also offering more SMB loans as well.

Crowd Funding

Pooling small amounts of money together to create a larger fund is not exactly a new concept. Real Estate Investment Trusts (REIT’s) have been around since the 1960’s, but today the concept is growing and expanding. Online crowdfunding campaigns (sometimes called peer-to-peer financing) has been used to raise funding to save local haunts or treasured landmarks, invest in necessary upgrades or even purchase new properties outright that may have significant value to the community. Perhaps most notably, the Empire State Building is actually in the process of being sold to a crowd of small investors that are purchasing “stock” in the building. This allows them to own a small piece of Americana for as little as $100 while keeping a national landmark in the hands of private investors.

Private Lenders

The severe mishandling of real estate financing by traditional banks has created a rather large gulf for non-traditional lenders to fill. In response, hedge funds are now funding a significant number of larger commercial loans and hard money lending is also on the rise. Some of these private lenders actually obtain their own lines of credit from a bank in order to create CRE loans, while others obtain funding from a pool of private individuals by forming an LLC. Commercial Mortgage Backed Securities (CMBS), which became nearly extinct in the wake of the 2008 crash are also making a slow comeback into the world of CRE.