Crowdfunding Real Estates – Different Methods Used

Real estate is ever growing and profiting. As long as there is an increase in population, the need to dwell is going to increase, and thus you will need more buildings and apartments. Everyone wants to try their hands on real estate now days, as it is one of the profit giving field and risk factors are pretty calculable. And this is where the crowdfunding real estates scores.

Crowdfunding is an entirely new way of financing. The concept of crowdfunding is that you can invest in a particular thing, and along with you there will be many investors. Crowdfunding helps the companies or individuals who are in a mission, but couldn’t gather the capital. Through crowdfunding a group of investors invest and the needy companies/sponsors can make good use of it. Both investor and sponsor are benefited by this.  Read more about crowdfunding here: http://myefunder.com .

In crowdfunding real estates, money gets invested in real assets like apartments, buildings and shopping malls. There are many platforms for crowdfunding real estate.

Some top crowdfunding real estates sites:

• Realty Mogul
• Fundrise
• Ground breaker
• Crowd street
• Ground floor
• iFunding
• Crowd baron
• RealCrowd
• RealtyShares
• Patch of Land
• Equity Net
• Peer Realty
• Peer Street
• Real Circle

Types of crowdfunding real estates:

There are three types of crowdfunding for real-estate. They are direct investing, indirect investing and Software as a service.

Direct Investing

This model of crowdfunding real estates allows investors to invest in real estate directly with a real estate firm. Here the crowdfunding firm acts only as an intermediate between the investor and the real estate sponsor.

The advantage of these crowdfunding real estates is that, the investors are co-investing with the sponsors and there is no brokerage. The benefit for the sponsor is that, they get direct access to the capital and they also have a direct contact with the investor.

CrowdStreet and Real Crowd are few among the direct crowdfunding real estates sites.

Indirect investing

In this model of crowdfunding real estates the accredited investors invest through a Special Purpose Vehicle (SPV) created by the crowdfunding firm. Added fees and brokerage are yielded by the crowdfunding firm here.

The advantage to sponsor in this type is that, they receive a single check and they only have to manage one SPV throughout. Here the risk of loss to the investor is more, because they don’t know on whom they are investing, and their profit is calculated on how good the crowdfunding firm does.

Realty Mogul and iFunding works using the indirect investment of Crowdfunding real estates.

Software as a Service (SaaS)

In this model of crowdfunding real estates, the sponsors integrate a SaaS technology platform with their existing website, through which investors can make investments. This is more or less like the direct investing.

The CrowdStreet and CrowdEngine are examples of SaaS crowdfunding real estates type.

It is estimated that the crowdfunding real estates may grow to a trillion dollar business by this year. Those who want to invest and make returns, but is doubtful about where to start with, can try their luck with the low risky crowdfunding real estates.