Crowdfunding real estates is a way to get the financial support from a large number of individuals who are willing to contribute to your real estate project. Crowdfunding real estates have come as a breath of fresh air for small investors who can now invest in the crowdfunding real estates project.
Are crowdfunding real estates beneficial?
Crowdfunding real estates create an opportunity for an individual to garner monetary contributions from a large number of people and also gives an opportunity to small time investors and average investors to contribute to the real estates projects. Crowdfunding real estates also help an individual by safeguarding him against the hassle of taking a loan from banks or convincing big investors to contribute to the project.
Crowdfunding real estates are different from other crowdfunding activities in many ways. Crowdfunding real estates involve two different ways for the contributors to help in financing the real estates project. The first one involves the contributors to invest in the real estates project in return for an equity stake in the project or property that is, the investors may get pay-outs on a routine basis in return for their investment in crowd funding real estates. The second is by debt investments in which the contributors receives some of the interest money on monthly basis. Out of the two ways of crowdfunding real estates, contributions in return of equity stakes is preferred mostly as it involves the potential for gaining more returns.
The onset of crowdfunding real estates took place with the signing of the Jumpstart Our Business Startups Act which relaxed the law on solicitation of investors. The law passed in 2012 gave a major boost to the crowd funding real estates industry. Crowdfunding real estates helped the investors to contribute in various projects without relying much on the people for communication or information.
Until the Title III of the JOBS Act was finalized in the year 2015, only investors having an annual income of $200,000 were allowed to invest in the crowd funding real estates projects. After the implementation of this act, the doors for small and average investors to participate in contributing to the crowdfunding real estates projects opened.
It is very essential to plan your crowdfunding real estate’s project to make it attractive and interesting enough to grab the attention of a large number of investors. It also becomes important to spend the time required for the success of your project and to have a clear idea about the goal you want to reach.
Crowdfunding real estates provide a lot of benefit to the investors which include the transparency and information provided to the investor regarding the deal. This transparency gives the investor ample amount of time to consider the pros and cons of investing in the project and then make an informed decision. It also helps in having accessibility to a large number of potential as well as diversified investors.
For your crowd funding real estates project to be a success, it is vital to choose the right platform for it. It is advised to carefully research about different platforms and then choose the one most suitable for it. It is also necessary to advertise your project and publicize it through different social media sites like Facebook, Twitter, LinkedIn, etc.
