What does this term really represent? Namely, it can be defined as a way of funding a particular real estate project utilizing a small amount of money from numerous investors. Those who are developers can easily access the networks of friends, family members, acquaintances, and even the general public via social media platforms like Facebook, LinkedIn, and Twitter.
Besides these, they can also rely on various crowdfunding platforms that can be found online. With the help of these websites, they can quickly expand their investor base. For investors, this is a great opportunity to spread their money across several investments. But what are other benefits of real estate crowdfunding? It is worth the penny? Scroll below to find out!
The Biggest Benefits of Real Estate Crowdfunding
Focus On Portfolio Diversification
Among numerous benefits that real estate crowdfunding offers, one of them is that it enables you to work on your portfolio diversification. By diversifying it, you are actually decreasing the risk that can potentially come when you’re having a singular investment. This way, you’ll be spreading the risk across different investments.
Namely, if one of your investment experience a major downfall, your investment portfolio is going to be spread across several investments which is definitely a good thing.
You Can Make Use of the Real Estate Crowdfunding Platforms
This is something that has significantly altered the real estate investing landscape. Back in the day, Real Estate Crowdfunding Platforms were intended mostly for the most experienced and profitable investors, however, things have changed for the better in the meantime. Nowadays, a lot of more or less experienced investors can be part of these platforms.
Just bear in mind that some crowdfunding platforms are open only to authorized investors. What’s great about them is the fact that they pool funds together to allow an average investor to participate in this market via private REITs, as well as private market real estate investments, such as individual properties.
Low Minimum Investments
In the past, people who were investing in real estate were considered very wealthy and successful. How come? Well, it’s because purchasing an investment property required lots of money, somewhere around six figures.
That’s precisely one of the reasons why a majority of people didn’t want to invest in real estate. But that real estate crowdfunding appeared and addressed this problem. Now, people no longer have to worry about having enough funds for something like this, especially now when there are so many amazing platforms that allow average investors to participate, and at the same time, limit downside risk.
Don’t Forget Your Community
And last, but definitely not least, your community must be mentioned. Now, investors have the opportunity to strengthen their community by investing in them. Through crowdfunding, community organizations and local residents can connect and simply invest in local real estate, which can be potentially very profitable.
Even though some people may be doubtful when it comes to this type of investing, as you can see, there are numerous benefits of it. However, just like with anything else, you have to act smart in order to succeed.