There’s no doubt that crowdfunding is one of the greatest ways to raise capital – it’s fast, and it works. This has made it a preferred investment method. Why? It gives people the opportunity to invest directly in the progress of their community and the best thing about it? No need for a middleman. So many industries have benefited significantly from crowdfunding, and real estate is no exception, but before we get into how crowdfunding has propelled the real estate industry, let’s get down to the nitty-gritty of how it all works.
Crowdfunding or crowdsourcing as it’s alternatively known is a collective effort to raise money not just through family and friends but online, through various platforms and social media. The person looking to raise the money tells the public what his ideas are in hopes of raising enough money to turn those ideas into reality. You’re probably thinking, “yes this is a great way to raise money for my start-up, but how is this related to real estate?” Like we previously mentioned, many industries have benefited significantly from crowdfunding and real estate is no exception. To better understand how the two are connected let’s take a look at the transformation real estate investments have undergone due to crowdfunding.
Before crowdfunding came into play, real estate investments were fully booked – reserved for the ones with overflowing bank accounts. Only those that were well connected could raise the required capital to make their ideas a reality – so, as a start-up, your chances were, close to zero unless of course, you went through a real estate firm (which of course would require more money). Crowdfunding has broken through these barriers and has brought the elite-real estate world to us, the people with the great ideas but without the capital. How has this affected the industry? Let’s see.
You can start with as much or as little as you are comfortable with. You are the only one dictating your risk appetite; nothing left to chance. In this way, you get to test the waters and familiarize yourself with the different deals out there before carving your decision in stone.
Speed and efficiency are the two factors that will keep crowdfunding alive. It’s just come to the point where it’s easier to raise money online than to go to a bank and get a loan. Because so many people get involved, the amount of time it takes to raise the required capital is significantly reduced, and moreover, everyone is satisfied – client and advertiser.
This is probably one of the greatest perks of real estate crowdfunding – lack of restriction. You can invest however much you want in as many projects as you like which significantly decreases the risk you’re taking. For example, even if one of your projects fails (which it won’t given the interest over time data) you have any one of your other investments to keep you afloat. All in all? A win-win situation.
4. Global Reach
When real estate first began it was all done locally. I mean, you couldn’t really invest in something that you couldn’t physically be there to see, but that is so in the past. All the information regarding your property investment will be disclosed on the platform. This means you can invest in property that isn’t even in your country. The limit is now the sky.
I could sit here and go on all day about how amazing this progressive investment structure is and how technology has yet again propelled us further into the future – but don’t take my word for it, see for yourself.