The Rebels’ Guide to Crowdfunding Real Estate Investment

Investing in real estate and other associated business ventures wasn’t as fun and easy as it seems to be today. When real estate investment actually began, it was a game for only the Uber Rich in the society. Only those with deep pockets were involved in it and due to the fact that it requires huge upfront amount to own a piece of property, anyone not a part of the rich and high class society was either don’t have access to right opportunity or was strictly advised against venturing in that direction.

However, fast forward to our modern era, things have become a lot different. With the advent of technology advancements, access to information and new crowdfunding regulations, real estate investments have become easier and open to all.

Crowdfunding was started on a strong demand to level the playing field and providing access to everyone to high quality real estate investment opportunities through alternative investment avenues and helping project developers gain easy access to funds to facilitate their projects, buildings, etc. This is why, it has become so easy for anyone, even with a little capital, to get huge returns and create their own little investment portfolio. Investment opportunities that were far reaching before now available at the fingertips of anyone who is ready to invest; not just the wealthy and the richest community.

By definition, real estate crowdfunding involves multiple investors coming together to pool funds and invest in a real estate project and share the earnings. Real estate crowdfunding can be further broken down into two main categories:

Equity Investments:

Here, investors make investments in properties, whether residential or commercial and as a reward, each of them holds an equity stake in the entire project. Whatever income or benefit generated by the property, each investor has a share of it, with each person’s share being previously agreed upon based on certain criteria.

Debt Investments:

This just means investing in a mortgage loan which is tied to a particular property. Once the loan has been financed or repaid, each investor will receive a share of the added interest.

Out of these two forms of real estate crowdfunding investments, equity investments tend to be the most lucrative and have the potential of yielding greater returns due to the fact that the profitability of a debt investment is heavily affected by the interest rate which has been pegged on the loan. On the flip side though, equity investments tend to come with more risks and usually require a much longer holding period.

Crowdfunding came with a lot of great improvements over the conventional method of real estate investment. A few of its improvements are:

Lower Initial Costs

Perhaps the biggest advantage of crowdfunding over the conventional real estate investment is the fact that it costs far less to get locked in a deal and started with an investment of your own. Before the emergence of crowdfunding, it took heavy amounts of money to cover the upfront costs of investing in a property. Due to the fact that crowdfunding involves a number of investors, these high costs have been successfully removed and investors are free to put in just a few thousand dollars into an active investment and expect returns when due.

Technological Inclination

Crowdfunding is essentially done through an online platform. Thus, it eliminates the stress of conventional real estate investment and makes things a whole lot easier. All you have to do is signup an online portal, view all available online real estate investments opportunities, and start putting your money to work. It’s highly important not to get overwhelmed by the ease which crowdfunding creates and become financially ignorant.You should do your thorough due diligence and understand what kind of investments you are making and when you will be receiving your returns.

No Geographical Barriers

Before the emergence of crowdfunding, real estate investment used to be a primarily local endeavor. However, crowdfunding has made it possible for investments to be put into any corner or project on any side of the world. Geographical barriers are completely obliterated.

Access to Information

Real estate investments are bolstered by insider knowledge. Today, real estate crowdfunding platforms like DiversyFund helps you with research and make sure that you are adequately informed, ensuring that you as an investor aren’t left in the dark and you’re fully aware of the type of investment you’re putting your money into; its nature, holding period, risks, etc.