Real estate crowdfunding represents a very attractive mode of investment. The reason? The risk is lower than other forms of real estate investing. Through a crowdfunding platform, the investor may participate by investing as little as $5000 into a profitable real estate offer.
According to Massolution, the worldwide market for real estate crowdfunding is expected to reach $3.5 billion by the end of 2016. This would represent a significant increase over $2.5 billion invested in 2015. (Reference — http://icrowdnewswire.com/2015/11/26/top-5-real-estate-crowdfunding-predictions-what-to-expect-for-2016-and-beyond/)
Why has real estate crowdfunding expanded so rapidly in recent years? The answer is multifold:
Easy-to-Use Platform
The entire real estate transaction is handled online via the crowdfunding platform. This simplicity and ease-of-use is attractive to your modern technical savvy investor.
Low Entry Barrier
The barrier to entry is low. With as little as a few hundred dollars, an investor can take part in the ownership rights of a commercial or residential property. The best platforms also allow potential investors to review properties that have been properly vetted, reducing the inherent risks associated with such investments.
Advantage over REITs
With an REIT, the investor invests in the REIT company itself and does not hold a share certificate in a specific property investment. However, with real estate crowdfunding, the investor does maintain a share of ownership without the normal legal obligations and complications involved with owning such property.
International Investors
Real estate investment through the means of crowdfunding opens up entire windows of opportunity for international investors. International boundaries are no longer a barrier into this market. The setting is now ripe for a continual increase in real estate crowdfunding opportunities. Investors are no longer constrained by the past logistical constraints connected with buying real estate in a foreign country. Digital crowdfunding platforms have removed these barriers.
Younger Investors
Millennials, those born between 1980 and 1999, are the group of investors to watch out for as a significant player in the crowdfunding real estate market. The low price barrier to entry makes this mode of investment attractive for this group. These tech savvy individuals also merge perfectly with such an easy digital investing platform.
Online investing in real estate through crowdfunding platforms in on the rise, and as the real estate market stays healthy, the prospects appear ripe for continued growth into the future.
