Crowdfunding Real Estate Investing

Crowdfunding is a technique used by investors to pool money together for the sole purpose of investing in an asset. It is mostly considered when a bigger project is in view and cannot be singly handled by one investor. It is a common method of raising money for businesses through different crowdfunding platforms, including social media to reach a wider audience of potential investors. The basic idea behind crowdfunding is to have more people bring in smaller amounts of money to execute a big project. With crowdfunding, investors can become shareholders in a company of real estate property. It also offers companies the opportunity of accessing capital that is beyond their current capacity.

Real Estate Crowdfunding

Real estate crowdfunding is similar to equity crowdfunding only that the funds are being used to purchase real estate properties. It allows investors to buy into a property and automatically become shareholders. A real estate crowdfunding investor does not need to purchase a whole real estate building to earn profits but can earn a portion of the profit generated from the property. Typically, revenue generated from a building’s rental income or proceeds from sales will be distributed among investors.

The concept of real estate crowdfunding was introduced under the JOBS Act which allows investors to pool funds together to invest in real estate. Prior to recent times, real estate investors could only invest either by buying physical property or investing through Real Estate Investment Trusts (REITs).

Benefits of Real Estate Crowdfunding

Non-accredited investors can benefit from real estate through crowdfunding; and one of the key benefits is that the provision of low minimum investment amounts that are required. In many cases, non-accredited investors can become shareholders with as low as $5,000. Another benefit is that; real estate crowdfunding helps investors reduce portfolio-associated risks. Investors will be able to diversify their investment portfolios by mixing equity investments with real estate investments.

There are also benefits that apply to real estate crowdfunding companies or platforms which enables them to further expand their business operations.

• It increases their funding options while growing their investor network.
• It makes access to capital readily available.
• It can be used as a direct marketing strategy to grow a business.
• It builds investor loyalty.

Note: One of the biggest risks of crowdfunding as an investor is to put your money in a company that is not well-known. If a company doesn’t have a lot of financial history, there is a good chance that investors can lose all their money. 

Editor's picks

FUNDRISE Review (Features REITs And Crowdfunding)

To read more about our reviews on real estate investment trusts and crowdfunding surround investing in real estate. Click the link above or search for real estate related stories on Investingport.com. To become a smart investor, you may have to divest your investments. A good way of doing this is by getting involved in real estate deals. 

It is a slow but sure way to become rich and those that own rental properties and other investment properties can testify to this. 

At Investingport, our goal is to educate, research, and provide our readers with facts. Joining a crowdfunding real estate deal is a smart move. However, you owe it to yourself to do your due diligence. 

Crowdfunding in real estate 

Crowdfunding real estate is a new method investing in real estate with the use of crowdfunding to raise money for real estate investments. Using this method of real estate investing allows investors to be able to invest in a wide variety of properties. This also allows them to bypass mortgage brokers, real estate agents, or contractors.

 How much money can I make in real estate crowdfunding? 

Making money with real estate crowdfunding could be easy but it all depends on the deal. Each real estate deal depends on location, price of the property, rent from rentals, and other measures that bring in income for investors. Therefore, the amount of money that investors can make depends on these few things. 

• The amount of money invested 
• The return on investment 
• Fees
• Inflation, Etc. 

How much can I invest in real estate crowdfunding?

There are limits to how much non-accredited investors can invest in this type of funding. For those that earn income lower than $100,000 per year or have a net worth below $100,000. They are only allowed to invest $2,000. Also, a separate limit based on net worth may apply.