A relatively new way to invest in commercial real estate is making its way quickly up the ranks. Real estate crowdfunding is a new and innovative way to successfully invest in commercial real estate and a far simpler way than any that have been offered before. Assets that have previously been reserved for only wealthy people are now being offered to everyday investors which is revolutionizing the way they invest.
These great real estate crowdfunding websites combine developers and many other professionals in real estate with investors who would like to gain exposure to the world of real estate investing. It is a great way to invest in real estate without financing, owning, and managing properties which can become inconvenient and a hassle.
What is real estate crowdfunding?
Crowdfunding essentially pools small investments from a large group of investors and then uses that to fund a venture of project. It is very easy to raise a large amount of money quickly when you have enough people to make smaller investments and crowdfunding further pushes that. If you’ve heard of GoFundMe, it is likely that you understand crowdfunding sites.
GoFundMe is a platform for people to make donations to a specific cause and proves the fact that small investments can quickly become a lot of money. It is one of the most widely known and used crowdfunding sites for raising money. Raising capital for real estate investments is what real estate crowdfunding does and the process allows investors to effectively invest in real estate without having to manage, finance, or own real estate.
The pros of real estate crowdfunding
The pros of real estate crowdfunding are as follows:
- Automatic investing on various platforms
- Significant exposure in real estate without having to finance, manage, or own
- The potential for high profit through distributions and a great lump sum return once your investment has ended
- You can access investments that would usually be unaffordable due to low minimum investment
The cons of real estate crowdfunding
The cons of real estate crowdfunding are as follows:
- Some opportunities are only available for accredited investors
- Your money may be tied up at the very least three to five years because it is illiquid
- Depending on your choice of platform and investment, you may face high fees
- You run a higher risk as opposed to other types of equity investment
Since Fundrise launched in 2012, it has invested in an overwhelming amount of real estate; more than $4 billion, across the US. Now, at the present time, Fundrise manages over $1 billion of equity. It is managed on behalf of more than a whopping 130, 000 individual investors.
Fundrise makes it incredibly easy to invest in real estate with its low fees (1%) and low account minimums ($500). Fundrise has worked insanely hard to reduce and remove the large barrier that comes along with real estate investing. It is a great crowdfunding platform for passive investors.
More than 197, 000 investors have joined RealtyMogul since its inception in 2013. RealtyMogul is well-known for its amazing due diligence due to the fact that they do an in-depth vet of every single potential property in person. They also closely scrutinize every detail and deal using decent methods and models.
RealtyMogul only works with partners who have an exemplary and proven track record and are very strict on it. They also make sure that all partners have experience managing assets. RealtyMogul refuses to invest in non-cash flowing investments and investors are able to choose from three objectives which are:
- Passive Income
Roofstock is an incredibly low-cost investment platform that makes it super easy for absolutely anyone to get into real estate investing. It has low fees (0.5% of purchase price), thorough inspections, and top of the line customer service. If you are new to the investing world, especially real estate investing, it can become overwhelming.
However, with Roofstock, it all becomes easier. Roofstock enables everybody, even complete beginners, to make a good investment. It was launched back in 2015 and it provides research, insights, and analytics for every offering. These tools allow you to be able to evaluate and then easily purchase an investment property.