4 Things You Need to Know About Crowdfunding Real Estate
Already a billion dollar industry and expected to more than double this year, real estate crowdfunding is growing rapidly. At the moment there is faster growth surrounding funding for commercial and industrial investments, but residential real estate presents just as much opportunity as the industry grows to $2.5 Billion by years end.
According to Massolution, in 2014 there were real estate crowdfunding campaigns that ranged from $100,000 - $25 million. There are currently 85 companies that operate as crowdfunding platforms, with plenty of room within the marketplace due to the innovations in online tech.
Online real estate crowdfunding companies are paving the way for investment methods that typically yield rates of return that are higher and less risky than common investment opportunities, especially with money pooled among multiple investors.
These companies are causing a paradigm shift within real estate investing, in that they provide opportunities to average investors where there used to be access only for the wealthy. For example, a new crowdfunding company located in Chicago called PeerReality is offering investments with as little as $5,000.
Online finance and crowdfunding as a whole have led to the public warming to the idea of handling and investing money through a website. This acceptance of concept coupled with highly capable tech will likely lead to crowdfunding playing a major role within the real estate industry.
Despite the fact that real estate crowdfunding is already 75 years old, we are just now seeing development within the industry on a major scale. The fact that there is still rapid growth taking place means that there can occasionally be a lack of quality control and/or proven track records.
As this industry boom occurs, technology and process will transform along with it. Companies will separate themselves from the pack due to superior technology, record of success, and opportunities to provide niche investments.
When weighing all of the pieces, there is one thing that most every real estate investment professional can agree on, there is huge potential for crowdfunding within the marketplace. The amount of opportunities quickly provided to investors of multiple incomes is unprecedented, and growth is accelerating rapidly.
With recent improvements to the economy, real estate crowdfunding presents an opportunity for the rebuilding of investment portfolios to a variety of investors. Perhaps most promisingly, there is more potential to mitigate risks involved with real estate investments when they are crowdfunded because of how much cheaper it is to diversify your portfolio.