Crowdfunding relies on an old idea that when a community pools their resources together, more can be accomplished.
Today, online crowdfunding has made the dreams of entrepreneurs, inventors, and creative individuals come true, with big crowdfunding websites like Kickstarter helping communities pool their resources to accomplish something bigger than a single individual could accomplish. And now, crowdfunding has an increasingly important place in real estate investing.
So here are some tips on how you can get started investing in real estate through crowdfunding, with brief analysis of five real estate crowdfunding platforms.
Real Estate Crowdfunding Isn’t a Fad
The idea behind real estate crowdfunding is simple. When a large number of investors pool small amounts of capital and invest in a bigger project, everyone can hope for larger returns than if they had invested solo.
This simplicity has doubters wondering if real estate crowdfunding can actually be a viable method of investing in real estate. In 2014, investment crowdfunding was responsible for about one billion dollars in spending, and by the end of 2015 the yearly total for funds infused into the economy is expected to be close to three billion.
Many states that previously required licensing for investment ventures like crowdfunding are now allowing anyone with an interest to get involved, and this kind of deregulation will likely continue.
As a result, more people are making money from crowdfunded real estate investments than ever, and this trend isn’t a fad that is likely to go away.
Picking a Real Estate Crowdfunding Platform
The mechanism of real estate crowdfunding is revolutionary because of technological advances. These tech platforms enable investors to pool their funds and jointly invest in properties from around the world.
Since the tech platform is essential to real estate crowdfunding, picking the best platform to meet your needs is important. So, here are five of the best real estate crowdfunding platforms for investors.
RealCrowd has proven to be a successful platform because real estate professionals along with tech geniuses designed it. Investments through RealCrowd go towards professionally managed commercial projects.
#2 Prodigy Network
Prodigy Network is one of the largest crowdfunding platforms in the world and continues to be one of the most popular places for real estate investors to pool investments. Prodigy focuses mostly on larger commercial projects, and has a higher base investment level than many other crowdfunding platforms.
Fundrise is great for entry level investors because it has a lower required investment level, allowing investors to start with as little as $100. Many of the projects handled through Fundrise are smaller in scope because of the smaller investment level, but it is rewarding for many investors to invest in local small-scale projects.
#4 Realty Mogul
Realty Mogul is specifically targeted at real estate investors who already have experience in the industry, and are looking for tech tools to get involved in crowdfunding. If you want to apply the mogul skills you have already built up, this is a good platform for you.
#5 Patch of Land
Patch of Land is all about streamlined efficiency, as one of the easiest platforms you can use to start investing through crowdfunding. The minimum investment level is mid range, providing a great deal of opportunity for profit.
Challenges of Real Estate Crowdfunding
Since real estate crowdfunding is a relatively new investment arena, there are a number of challenges associated with this form of investing.
Issues in respect to liability and insurance have come into play, and quality control standards are still developing as well. Plus, many states have not determined how to regulate real estate crowdfunding, and the relationship between crowdfunding platforms and the federal government is still being hammered out.
But the good news for investors is that these challenges are becoming less relevant, and many of them should be worked out in the near future.
Graystone Investment Group
Graystone Investment Group is an experienced Investment Group wholesaling properties in the greater Tampa Bay market.
Unlike other wholesaling groups, we find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years, at no extra charge.