Real estate investing used to be inaccessible to the majority of people. Traditional property investment required a lot of experience, time, skill and, most importantly, available funds. As time progressed, the opportunities broadened, but real estate remained extremely high-priced. That's why finding their first profitable asset that will bring a good return on investment is so important for beginner-investors. The stakes are very high for them. But as we live in the modern world, there is a solution that could prove helpful for those new investors - property crowdfunding.
With property crowdfunding, investors pool funds together to diversify their portfolios with various projects. This idea of investment has become very popular in recent years. There are a number of reasons for this:
- Small amounts of money invested. Property crowdfunding allows minimal investments in real estate projects. This makes properties accessible to every small investor, something that was impossible just a few decades ago with real estate prices being equivalent to most people’s life savings. Now a beginner investor can enter the market with a small portion of his monthly revenue and invest in several projects at once.
- Turnkey ready solutions. Investors no longer have to worry about finding a good real estate deal, purchasing the property, going through all the gruesome paperwork and dealing with maintenance issues. In property crowdfunding, this work is mostly done by a third party that arranges and controls the process.
- Diversification. Investors always worry about risks, and for good reason. There are hundreds of real estate offers out there, so which one should they choose? Crowdfunding offers the opportunity to invest in several projects. Investors can even choose different types of properties - for example, they can invest money in a family rental home and in a hospitality project to see which one delivers better results. It gives them the ability to experiment with various combinations.
These are only a few of the advantages that real estate crowdfunding offers investors. But this is already enough to show that this model can be a solution for beginners who don’t know the real estate market well and haven’t previously had the opportunity or funds to research and participate in it.