Since the Great Recession, crowdsourcing and the sharing economy have become increasingly popular, especially among younger people who were especially hard hit by the collapse. Millennials have been using crowdsourcing to fund artistic endeavors, art projects, and now — real estate.

New commercial real estate crowdfunding firms have emerged with a bang, with estimates placing the industry's income around $3.5 billion in 2016, just years after it began to appear.

The principal tool for crowdfunded real estate is Electronic Real Estate Investment Trusts, which have allowed companies to greatly expand their pool of investors.

Traditionally, real estate has been a very popular investment vehicle, but often cost prohibitive for young people. However, among those who have invested in real estate, 96% credit it with their financial success. But for most people, securing enough financing for the down payment alone, which can be as high as 25% the cost of the property, can be a challenge.

For a long time, non-traded REITs were the best bet for lower income investors to diversify their portfolio with real estate. The high front-end fees, which can range from 10% to 15%, still discouraged many investors from buying in.

Now, eREITs have a significant advantage. Because their online platform allows them to cut out the middleman, crowdfunded real estate firms are able to significantly lower the fees required, or eliminate them all together.

For crowdfunded firms, the ability to appeal to lower income investors might represent the key to success. Real estate investor Jay Maddox told National Real Estate Investor Online that while institutional investors shy away from crowdfunded real estate, the sector is on the brink of massive expansion.

“I also think it is really going to be the best fit for properties that are well below institutional investor’s radar screen.”

That means that, in order for crowdfunded real estate businesses to thrive, they will need to pick their targets carefully. A Florida based business, for instance, might not be able to compete in the major Florida destinations towns like Miami or Orlando, but there are still 1,200 miles of sand beach and 1,800 miles of coastline for them to find a less competitive space to develop.

The proliferation of crowdfunded real estate firms has been beneficial for more people than just the investors, or even those in the real estate industry. The rapid acceleration of online investment platforms has also been a boon for the information and technology industry, which is responsible for the design, operation, and security of such sites.

At the same time, there have been signs of trouble within the industry. Crowdfunding platform iFunding, in particular, has garnered a great deal of negative attention lately, with investors and real estate professions bemoaning the poor organization structure and operations.

Still, the future looks bright for crowdfunded real estate. Tore Steen, CEO and co-founder of CrowdStreet Inc, is especially optimistic.

When speaking to National Real Estate Investor Online, he said, “There could be a day down the road where players that have traditionally raised money for institutional investors could be looking at this retail channel as a supplement, or even as an alternative when it gets big enough.”