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 allows people 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. 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 is alternatively known as crowdsourcing. It 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 investments?” 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 brought the elite-real estate world to us, the people with great ideas but without the capital. How has this affected the industry? Let’s see.
1. Exposure
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.
2. Efficiency
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. Due to high involvement, the amount of time it takes to raise the required capital is significantly reduced. As a result, everyone is satisfied – the client and advertiser.
3. Flexibility
It 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 give 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 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 a 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 impressive this progressive investment structure is. How technology has yet again propelled us further into the future – but you shouldn’t take my word for it. See for yourself.
