Real estate crowdfunding is a method of raising funds to invest in real estate. Here, you have to reach out to several investors who will contribute to this project. It is also referred to as property crowdfunding. Real Estate Crowdfunding has several advantages over traditional real estate investment and is revolutionizing a traditionally conservative sector with little interest in technological change.
Why Invest in Real Estate Crowdfunding?
It is important to note that when we decide to invest, be it real estate or any other type, we must always have some knowledge and never invest in those complex products that we do not fully understand. In the specific case of real estate crowdfunding, we must consider the advantages of this investment system compared to traditional real estate investments:
- Possibility of access for small investors: It allows investing in real estate for large investors and people with limited economic opportunities since it will enable you to invest from 1,000 dollars or even less, depending on the type of project.
- Choosing the type of real estate for investment: This minimizes risks, as it allows you to diversify projects and real estate objects (promotion of new houses, buying houses for reforming for subsequent sale or rent, etc.), as well as for different groups of the population and even in other countries.
- Attractive return terms: Short-term investments and periods of obtaining results, which can range from one year, except in exceptional cases, to no more than five.
- You don’t have to be a real estate expert: You don’t need to be well versed in real estate investment, as crowdfunding platforms have experts who select and analyze various projects to minimize investment risks.
- The investor chooses each asset for investment: When investing through crowdfunding in real estate, it is the investor who decides what type of investment to participate in, as opposed to what happens with investment funds or companies investing in real estate, where the Management Bodies of these organizations decide investment projects.
- Asset independence: Each of the projects in which it is invested is independent of the others, minimizing investment risks.
Alternative to bank financing for promoters: For developers, it is an alternative to bank financing, more flexible and faster, allowing them to finance various projects.- Diversification Means Less Risk: Like any type of investment, real estate crowdfunding is subject to risks. However, these are partially minimized by the possibility of diversification and the fact that investments are always based on a physical asset.