We know that real estate provides one of the most lucrative options for those looking for long-term, stable investment returns. Unlike stocks or bonds, the real estate market isn’t as prone to wild minute-to-minute fluctuations, and real estate can offer more stable and better long-term returns.
In recent years, there’s been a huge rise in a financing option called crowdfunding. With this growing trend, real estate has jumped in the game of crowdfunding too. Many people may wonder why they should invest in real estate through Crowdfunding rather than traditional real estate investment vehicles.
There are many real estate crowdfunding platforms that have cropped up over the last years that you can consider.
What is Real Estate Crowdfunding?
Real estate crowdfunding works the same way as many other crowdfunding ventures: Investors pool their money to fund a project, a product or a company in the hopes that there will be a future profit. In many cases, investing in real estate has a high financial barrier to entry, like having a down payment saved. But some real estate crowdfunding platforms are working to lower that threshold so you can invest with as little as $500.
Fundrise, Yieldstreet, Equuitymultiple, Crowdstreet, DiversyFund, and others are good platforms to look into. Most have account minimums that range from $500 to $25,000+ and many have transaction fees that apply.
These platforms connect real estate developers to investors who want to finance projects, either through debt or equity. Investors hope to receive monthly or quarterly distributions in exchange for taking on a significant amount of risk and paying a fee to the platform. Like many real estate investments, these are speculative and illiquid — you can’t easily unload them the way you can trade a stock.
Some of the above and other platforms not mentioned are open only to accredited investors, defined by the Securities and Exchange Commission as people who've earned income of more than $200,000 ($300,000 with a spouse) in each of the last two years or have a net worth of $1 million or more, not including a primary residence.
If that’s you then you’re all set to choose your favorite platform. If not, just be sure to invest with one like Fundrise that doesn’t have these requirements.
Let’s explore some of the benefits of real estate crowdfunding as a possible option for investing into real estate.
Minimal Capital Needed
As I mentioned above, Fundrise has a low $500 investment minimum needed for you to jump into what could be highly sophisticated and high cost real estate projects. In the past, you needed $50,000 or $100,000 just to get in on the ground floor of a deal.
Crowdfunding real estate platforms allow you to invest in different properties around the world, which offers investors many exciting options and new opportunities for capital gains. Crowdfunding helps both novice and veteran investors diversify portfolios across a range of quality real estate investments.
Less Headaches and Hassles
One of the biggest advantages of real estate crowdfunding is not having to handle the headaches that come with owning traditional real estate. It’s cool to invest in huge properties and never have to deal with frozen pipes or troublesome tenants.
If all of this appeals to you, consider this as a good investment option that you should look more into as a great way to invest in real estate with less stress and headaches.
If you’re looking for the best turnkey rental property firm in the Baltimore, Maryland area, you should learn more about Utz Property Management.
Utz Property Management offers a full-suite of real estate services for a fully automated experience for investors. If you want help finding, rehabbing and managing properties, don’t wait, schedule a free turnkey discovery session with Jenni Utz today.
Or, you may contact Utz Property Management today at 410.332.4432.