Real estate crowdfunding is changing the way people can invest in real estate.
Historically, investing in real estate has been a privilege of institutional investors, corporations and ultra-wealthy individuals. Smaller investors’ options have been limited to buying residential properties or investing in real estate investment funds.
At the same time, the idea of crowdfunding – pooling money from a group of similar investors to make a joint investment – has been around for centuries. Neighbours have bought property together, and the members of one family – husbands and wives, brothers and sisters and cousins – have made collective real estate acquisitions.
The emergence of digital technologies and borderless finance has resulted in the creation of the modern real estate crowdfunding industry. Real estate crowdfunding platforms like Crowdestate provide their investors with 24/7 access to the deal flow, and the secure conclusion of investment contracts takes just a few clicks on the platform. Instead of spending valuable time and money on doing due diligence on hundreds of potentially promising real estate investment ideas, crowdfunding investors are able to browse through carefully selected and pre-vetted investments published on the real estate crowdfunding platform.
Real estate crowdfunding platforms allow tens of thousands of individual investors to pool their money to collectively invest in large real estate projects. Depending on the specifics of the real estate project, crowdfunding investors could be either secured or unsecured lenders or alternatively take an equity position and participate in sharing the project’s profits.
What are the benefits of real estate crowdfunding?
The number of benefits real estate crowdfunding provides to investors is extensive, and here’s the list of the most important ones:
- Real estate crowdfunding is available to everyone looking to invest in real estate. Investors do not have to be sophisticated, accredited or have high net worth to be able to invest on real estate crowdfunding platforms.
- Investors can pick their own deals and have full control over their investment decisions. This allows investors to build a real estate investment portfolio that is specifically tailored to their return expectations and risk tolerance.
- Investors have access to institutional quality real estate investments that require large amounts of capital, and that would remain unattainable to them without being crowdfunded.
- Investors have access to a geographically wide range of real estate investments. Historically, investors have been limited to their hometown or county, and thus, the selection of available real estate investments has been very limited. Also, keeping the investments concentrated in a very small geographic area results in an unnecessary diversification risk.
- Investors can remain completely passive and focus on making suitable investment decisions and collecting returns. As the crowdfunded capital is raised by a real estate company, they will remain responsible for the execution of the business plan and the daily management of the project.
- A low minimum investment per project allows for building a geographically and asset-wise diversified real estate investment portfolio with ease. Crowdestate, for instance, has set the minimum investment per real estate project to be just 100 euros.
- The secondary market provides liquidity to investors’ real estate investments if needed. Typical real estate investments are relatively illiquid, and the urgent need to turn some of the real estate investments into cash might take several months or result in a deeply discounted exit price. Leading real estate crowdfunding platforms have created highly liquid secondary markets where investors can buy and sell their real estate investments.
Crowdestate is one of the very first real estate crowdfunding platforms in Europe, established in early 2014.
Start your real estate investment journey by signing up on Crowdestate to access a wide range of pre-vetted real estate investment projects.