Paul Deitch, a former managing director at investment firm Oaktree Capital Management, has joined commercial real estate debt platform Patch of Land as CEO.
Patch of Land lends money, pooled from an online “crowd” of accredited individuals plus institutional investors, to borrowers. The online platform has originated $120 million in loans since its launch in October 2013.
“I came to the firm because I believe in the mission and product,” Paul Deitch, a 25-year veteran of financial services, told Real Estate Capital. “Some crowdfunding firms are building on equity, which I don’t’ discourage, but we’re not focused on it right now.”
Based in Los Angeles, the Patch of Land originally targeted residential properties but moved into the commercial space 10 months ago. The company will also soon roll out a new “fix-and-flip” product for clients looking to build single family rental portfolios.
Patch of Land’s minimum investment for an individual investor is $5,000, which is typical for the real estate crowdfunding space that ballooned after the 2012 passage of the US Jobs Act that allowed businesses to solicit investors online.
The total volume of real estate crowdfunding in the Americas has jumped from $11.4 billion in 2014 to $36.49 billion in 2015, according to a Cambridge Centre for Alternative Finance study released last month.
Deitch said he believes online crowdfunding will continue to grow due to the ubiquity of online financing technology and the recent regulations that the US government has put on banks.
Compared to more traditional lenders, one strength of Patch of Land is that it gives investors the ability to customize and “self-select” specific investments based on very specific criteria.
“People really do have preferences,” he said. “They have security preferences, concentration preferences, and certainly geographical preferences, and that’s what our platform allows.”