Why You Should Crowdfund Real Estate:
Crowdfunding is putting the “fun” back in real estate investing. How? It’s connecting investors to debt and equity investment opportunities online, without the hassle of dealing with large banks or financial institutions.
The process is easy too. It’s simplified real estate investing.
Here’s four reasons why real estate crowdfunding makes sense.
1. More Access to Deal Flow
Historically, only investors with deep pockets and inside connections could access quality deal flow and invest. Because investors pool money with others on a crowdfunding site, they can access deals they normally would never see come across their desks. And they can get in on bigger deals thanks to crowdfunded capital.
In addition to curating deals for investors, crowdfunding platforms offer as much detail as possible about operating partners and properties. Although investors are starting with more information, they’re still encouraged to conduct their own due diligence to make sure the investment is right for them.
2. Lower Minimum Investment Amounts
In the past, you needed $50,000 or $100,000 just to get in on the ground floor of a deal. Because investors can now pool that amount of money using crowdfunding, a group of investors putting up as little as $5,000 each can access these deals, while major borrowers still get access to large amounts of capital.
Borrowers who need smaller amounts of capital now have a new funding source—one that’s potentially faster and easier to close than a traditional bank loan.
3. Risk Profiles for Every Appetite
Not all investment risks are created equal. Some are high risk, high return. Others are low risk, low return. Real estate crowdfunding lets investors find the amount of risk that’s right for them. The best part? There is something for everyone.
Investors can choose between lower risk, lower reward debt offerings where investors fund property development projects. Or, higher-risk, higher reward equity deals in which investments provide partial-ownership positions to investors.
4. Portfolio Diversification
There’s more than one way to diversify investments. Most individuals allocate their funds across assets including cash, money market accounts, stocks and bonds. Crowdfunding helps both novice and veteran investors diversify portfolios across a range of quality real estate investments.
Real estate is an attractive alternative investment for a number of reasons. Investors can diversify across geographies, property types and even operating partners. Individuals can also choose between debt and equity investments.
Crowdfunding is changing real estate investing for the better. Is it time for your portfolio to include crowdfunded real estate?