According Arthur Naoumidis, the chief executive of fractional property investment company DomaCom, crowdfunding should be viewed as a form of syndication in which “people can pool together to raise money for something”.

Until recently there was only one legal model under which a syndication platform could be established, Mr Naoumidis said, but the changes to the law will make a second crowdfunding model available to the general Australian market.

“The thing you’ve got to understand is that there are two types; what’s called ‘transactional’ crowdfunding, and then there’s fund manager based ones,” he said.

There are a number of differences between these two structures, Mr Naoumidis said, as each uses different legal structures and are beholden to different regulations.

Mr Naoumidis’ DomaCom uses the managed fund structure, meaning the business is registered as a managed investment scheme, is available to everyday Australians and is subject to all the same rules and restrictions as other managed investment schemes.

“You need a product disclosure statement, you need a sub-product disclosure statement, you need all these things about how to raise money, and that’s the rule set we operate in,” Mr Naoumidis explained.

“We’re like the separately managed account version of a real-estate investment trust.”

Under this model, individual investors select the specific properties they’d like to invest in rather than pooling their money with their peers – the way equity crowdfunding in the property space works.

The equity crowdfunding, or ‘transactional’, model has investors put their money into either a proprietary or proprietary limited company that owns the underlying property portfolio, Mr Naoumidis said.

“In other words, you get shares in a company and that company owns the property,” he said.

Mr Naoumidis predicts this latter model will prove popular with investors looking to access the property development market, with the managed fund model likely to be more popular among those looking to hold the property rather than do it up and sell it on (though the latter model can still be used for developments as well).