[February 25, 2023]I don’t know what everyone thinksreal estate crowdfunding(Real Estate Crowdfunding) How much do you know about investing?in the pastreal estateThey are all assets purchased and invested by the richer and older people. Whether young people want to buy a house to live in or enter real estate to make money, the first hurdle is often insufficient funds. However, with the help of crowdfunding platforms, young people can also step into the door of investing in real estate!
So-calledreal estate crowdfundingInvestment, simply put, is gathering sand to form a tower, relying on everyone’s funds to investreal estateproducts, everyone’s purse will not be too heavy, and the profit will be distributed according to the proportion of investment, so that you can flip real estate with a small amount of money and createpassive income.then real estatecrowdfunding investment, What platforms are there to invest in? What are its advantages and disadvantages? How is it different from so-called real estate investment funds?
How does real estate crowdfunding work?
real estatecrowdfunding investmentfor most investors, is still a fairly new concept, in fact, it is a concept of fundraising, and it is also a sharing economy.
When developers or real estate professionals spot investment opportunities, they may not want to fund the entire investment themselves, or they may not be able to do so, or like many crowdfunding investment platforms today, they are designed to allow retail investors to choose on the platform. For the desired investment target, invest the desired amount, and then the management of the platform will operate the follow-up supervision, and after earning profits, it will be returned to many investors.
Therefore, real estate crowdfunding investment provides many people with limited funds the opportunity to invest in real estate, especially for many young people to open the door to invest in real estate. You can invest in different types of real estate, real estate across state lines, you can invest in commercial real estate, real estate loans, different asset types, and more. So, over the past few years, crowdfunding investing has grown into a solid asset class, and with more and more high-quality platforms, more types of assets available to invest in, and a track record of solid returns, it may be time for you to A great way to diversify your investment portfolio.
Clean world: want to createpassive income You should know about real estate crowdfunding investment｜I heard that crowdfunding investment only costs 5 yuan? ｜What are the advantages and disadvantages of real estate crowdfunding investment｜What is the difference between crowdfunding investment and REIT｜Who is it suitable for? 【American real estateHot Spot】2/23/2023
Pros of Real Estate Crowdfunding Investing
For investors, real estate crowdfunding investment has several advantages:
First, the investment amount is low. Some platforms can invest as little as five dollars;
Second, the investment is convenient and fast, and can be completed in a short time through mobile phones and computers;
Third, because some platforms have very small investment funds, they can allow people without qualified investment status to invest, but please note that some platforms still require certified qualified investment status;
Fourth, there are a variety of investment options, and you can choose your favorite platform and approved products for investment;
Fifth, it is almost mindless investment. After selecting the desired product for investment, the professional manager of the platform can manage the project;
Sixth, this can easily create passive income for you, but of course there are risks.
Disadvantages of Real Estate Crowdfunding Investing
Now that the pros are out of the way, let’s talk about the cons. Remember that no investment is perfect:
First, don’t forget that investment must be risky, so not all crowdfunding products will make money, just like investing in stocks, maybe the original share was 30 dollars, but the profit may not be good, and it becomes 20 dollars , or the return is not as expected;
Second, the liquidity of this innovative crowdfunding investment product may not be so good. Compared with traditional real estate investment fund REITs, REITs can buy and sell shares at any time, but real estate crowdfunding platforms may have restrictions on investment. You may not be able to cash out within a certain period of time, otherwise there will be fines or derivative related fees;
Third, the transparency of crowdfunding investment is not good. Investors cannot intervene in investment management, nor can they see relevant investment records or documents, and cannot manage investment content like personal investment. just sit and see how it turns out;
Fourth, please know that these crowdfunding platforms are not shares traded on the open market, so if the company has any financial problems, or decides to limit redemptions, you may have no choice but to keep your funds on the platform. For example, in 2018, popular crowdfunding site RealtyShares abruptly shut down after failing to raise enough funds.
How is it different from REITs?
After talking about the advantages and disadvantages of real estate crowdfunding investment, you may still have a question: How is it different from real estate investment funds REITs?
In fact, these two types of investment are indeed very similar, they both use people’s funds to invest in real estate, but REITs are a form of real estate investment that existed in the 1960s. Investment institutions buy various commercial real estate from funds, such as large Apartment buildings, hotels, office buildings, warehouses, retail stores, and more, then distribute the rental income as dividends to shareholders. In fact, REITs are a kind of stock investment. They are traded in the open market and can be bought and sold at any time, so the liquidity of funds is very good.
However, because REITs are still traditional real estate investments, for most people, there are a lot of advanced data or incomprehensible descriptions. In many cases, you don’t really know what you bought, because it is a big investment. You just see that the rate of return seems to be good, so you invest in it, and that’s probably it!
On the other hand, investment in real estate crowdfunding platforms can be invested with relatively small funds through the platform, five yuan or ten yuan is fine, but most of them still cost hundreds of dollars or more. Also, the projects invested by these crowdfunding platforms are usually relatively small or targeted, such as an apartment, a restaurant, a loan, so you will know that your money is invested in this house, this store, etc. of.
In addition, some crowdfunding platforms are open to anyone, and do not require you to open an account or the process of fund verification. You only need to have a little money and put the money in, but there are also some that require verification. .
Another thing to note is that the current crowdfunding platform is almost not subject to government supervision. It is a kind of private investment behavior. It is just your capital exchange with this crowdfunding platform, so there may be a risk of fraud , so it’s best to do enough background checks, basic checks, to reduce the risk.
What real estate crowdfunding platforms are there?
After the above analysis of real estate crowdfunding investment, what platforms can be used? I will introduce a few below.
First of all, this company is called Fintor. This company just raised 6.2 million yuan in October last year. The founder, Farshad Yousefi, a 31-year-old immigrant from Iran, his mission to Fintor is “to enable everyone to invest Real Estate”, hoping to make it easy for all young people to make money from real estate. So they set the minimum investment amount at an astonishingly low threshold of $5, and they can only invest up to 10% of a project. Fintor currently has real estate in Huntsville, Alabama, Birmingham, Atlanta, and Nashville, Tennessee, and they are planning to buy real estate in 50 other cities.
In addition to ultra-low investment costs, Fintor is also committed to investing in the simplest way. Through the mobile app, the investment can be completed in a few steps with one click. Moreover, Fintor also allows users to quickly view investment-related news, and also establishes a community among users to exchange investment experiences with each other. So it’s a fairly youth-oriented app. Other low-entry crowdfunding platforms include Fundrise, which requires $10 to invest; and Arrived Homes, which has a minimum investment of $100. These are very suitable for entry-level investors.
Overall Best Real Estate Crowdfunding Platform
In addition, Investopedia, an investment website, selected the best real estate crowdfunding platform in 2023. Among them, CrowdStreet won the overall best. It was selected because their investment products are real estate products that have been reviewed and are user-friendly. Easy to find investment details. But its shortcomings are also obvious. The investment threshold is as high as 25,000 US dollars, and only qualified investors can invest, and then they cannot withdraw in advance. Although it has the disadvantage of high threshold, it has an average annual return rate of 18.3%, which is very attractive.
The most suitable crowdfunding platform for commercial real estate investment
In addition to being the best overall, there is also the best crowdfunding platform for commercial real estate investing: EquityMultiple, which has a minimum investment of $5,000, is entirely focused on commercial real estate and also offers equity, preferred stock, and senior debt investments. Although its investment target is rated as good, it also requires qualified investors to invest, and the investment threshold is still not low, and the options for getting back funds are relatively limited. With an average annual return of 15.2% through 2022, it’s still a solid pick for the right person.
Best platform for beginners
In addition, there is also a platform that is most suitable for beginners: Fundrise we just mentioned, the minimum threshold is only 10 US dollars, and there is no limit to qualified investors, and funds can be withdrawn at any time, but related fees may be incurred. Fundrise provides five levels of investment accounts, from entry level to premium level, each level has a minimum investment amount, and different investment strategies and potential returns. Annual returns from 2017 to 2022 range from 1.50% to 22.99%. As of January 2023, Fundrise manages $4 billion in real estate on behalf of more than 387,000 individual investors, and distributes more than $224 million in funds among numerous investors.
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The most suitable platform for investment loans
There is also the most suitable platform for investment loans: PeerStreet. However, due to the recent high mortgage interest rates and the sharp drop in the number of people applying for loans, PeerStreet had layoffs in January this year, but the number of layoffs is unknown. This is a part that everyone should pay attention to. But PeerStreet’s minimum investment amount is not high, only $1,000. PeerStreet is special in that it only provides debt investment, which can provide financing for buyers in the market, and then let investors earn interest. It distributes more than $280 million to investors through 2022, with an average annual return of between 6% and 9% on its select investments.
The best platform for real estate product research
Finally, there’s another company that has received the best real estate research: RealtyMogul, which also has a $1,000 minimum investment and doesn’t require accredited investors. It looks for well-leased properties, or properties with existing leases, and only works with real estate agencies with a proven track record and asset management experience. Moreover, it will automatically invest in REITs for investors, starting at $250 per month, which can be regarded as a way to help investors spread their risks. However, its disadvantage is that some products need to be held for a long time, and each product will have different related expenses.
Crowdfunding investment is easy, but be aware of the risks
The above is the introduction of these crowdfunding platforms. You will find that each platform has its characteristics, expertise, advantages and disadvantages, so if you want to participate in real estate crowdfunding investment, the first step is to study the attributes of each platform. , which features do you like, and which shortcomings you cannot accept, and then select products on the platform. A 47-year-old Tyler shared the reasons why he chose crowdfunding investment. He said that he just didn’t want to have a lot of troubles related to Ts. Ts refers to tenants (tenants), termites (termites), toilets (toilets) and trash (garbage).
However, I would like to declare in the end that I am just introducing this investment method to everyone, not advocating or soliciting investment. Please make your own judgment on any investment behavior. The above description related to the return on investment cannot be regarded as investment income Assurance of profits, investment involves risks, please be responsible for your own profits and losses. ◇
Responsible editor: Li Yaoyu