Real Estate is one of the biggest industries in the market. It includes land, property and everything on the land. The size of the real estate market is $8.3 trillion. It is one of the reasons why people invest in this market. Real estate investment means buying, selling, managing, developing, and renting property to earn a profit. Currently, this market is thriving. Most of the market investors are switching towards real estate investment. It is one of the most lucrative investment options. If you make the right investment decisions, you can make a fortune.
Example:
Mr A purchases an old residential house for $200,000. He further invests $10,000 to renovate the house. Once the house is new as ever, he sells it for $300,000. In a short span of time, Mr A makes a profit of $90,000 by making the right real estate investment.
However, the problem with real estate investment is that most of the investors don’t have access to huge funds. It is only for rich investors who have a fund available with them.
But now, you don’t need to worry about money while investing in real estate. With real estate crowdfunding, anybody can invest in real estate market with limited funds.
Real Estate Crowdfunding:
It is also known as property crowdfunding. It is an effective technique to raise money. It is the same as all the other crowdfunding ventures.
Crowdfunding is a technique in which investors come together and invest a small amount of money to fund a big project. So instead of one person funding and owning the project, a crowd of investors will do it.
As we know, real estate is not cheap. It is quite difficult to purchase a land or a property as the prices have increased considerably in the last few years. The rates have nearly doubled in half a decade.
So to purchase a new property or to fund a new startup property construction project, many investors will invest their money. The project owner can raise funds to complete the project from the investors. By investing a small amount, the investors will become the part-owner of the project.
It is also known as real estate peer-to-peer financing. The best part about crowdfunding is that the investors don’t have to meet in person. Everything is done online. There are crowdfunding platforms where companies list their project startups. The investors can check this platform to look for investment options. If you like a project, you can invest your money and fund it and earn returns.
Example:
Company A is a real estate startup who wants to raise $10,000,000 for their project. Now, they will list their project on a real estate crowdfunding platform. The project will be visible to all the investors on the platform. The investors who like the project will invest their money in it. The project will be listed until the target money is collected. The investors will earn returns on their investment.
To know more about real estate crowdfunding, you can visit this link. You will get a detailed explanation about crowdfunding in the real estate sector.
Types of Real Estate Crowdfunding Investment:
There are two types of real estate crowdfunding investment. You can invest in any of these options.
Equity Crowdfunding:
It is equity-based crowdfunding. You will get higher returns with this plan. The returns will be given on rental income of the property. The platform’s fees will be deducted from the money. You will get quarterly payments. If the owner sells the property, you will get the share from the appreciation value as well. However, it is risky because equity is at stake. If the value depreciates, there will be a loss instead of profit.
- Debt Crowdfunding:
It is crowdfunding based on debt. Most of the investors go with this option. It is very common. This option is much simpler. You simply have to lend funds to the project owner. In return, you will get a fixed interest. You will either get quarterly returns or monthly returns. Once the property is sold, you will get the invested money back.
Why Invest in Real Estate Crowdfunding Projects:
There are many benefits to investing in crowdfunding projects. It is a win-win situation. You will be able to help a startup real estate project and earn profit in return for it.
- Higher Return:
You can earn a higher return in investment in these projects. The investment fees are pretty low, which means higher returns. In Europe, you will earn 12% to 14% ROI. You will get a higher dividend. Both public and private REITs pay 90% taxable income to investors. It results in higher returns.
- Portfolio Diversification:
Investing in real estate will help you diversify your portfolio. It will look good and help you to prepare a strong portfolio. You can buy assets from various countries.
- Less Investment:
Even if you don’t have enough money, you can still invest in real estate with the help of crowdfunding projects. The fundraisers put a minimum cap of $500. It means you can invest with just $500. There are some investment opportunities which start at just $50. You can invest as per your choice.
- Short-Term Investment:
You can choose the term of investment as well. There are short-term real estate investment options available in the market. You can invest for months as well as years.
- Transparency:
There will be total transparency in crowdfunding investment. You can check all the details about the project on the platform. The fundraiser provides all the details. You will know where your money is going. It enhances transparency in investment.
- No Landlord Problems:
This is the best thing about real estate investment. You don’t have to act like an actual landlord. There will be no hassle of managing the property or maintaining it.
- Investment Opportunities:
You will get various opportunities. As everything is online, you can even invest in a project in some other country. You will find thousands of projects on the platforms.
- Simple and Easy Investment:
It is very simple to understand. You can easily invest in any project by funding the project. You don’t have to travel or worry about paperwork. It is easier than other investment options.
These are the benefits of investing in real estate crowdfunding projects. You can easily earn stable and passive income without many efforts.
