If you are new to real estate investing, you may have heard several reasons why it is the preserve of just a few wealthy individuals and institutional investors, and if you are an old investor, you know that these are true! Real estate is capital intensive and you need hard money to participate. That you need to know a great deal about properties to understand how it works. Indeed real estate can lock up your capital for a long time, you have to be patient enough to recover your investment. Structuring real estate finance can be complex and difficult to understand. Property transactions and laws how many wished they had not got involved!
Really, these hard characteristics of real estate are true; and entirely so if you are investing using the traditional methods. But novelty and technology have changed the game for good. Even though some features of property investing would have to be endured for the full benefits; for example, you have to be patient enough, the majority of the hard parts; that make real estate inaccessible to many have been removed. And so, it is now very easy to get started in properties or put more into it.
So the easiest way to get started in real estate is by investing with others. This is real estate crowdfunding! It basically involves several individuals each bringing small amounts of money to be invested into properties. The individual becomes a shareholder in the property and enjoys proceeds from rents or sales. Real estate crowdfunding has become the biggest innovation and here are the reasons:
Little Money required
You can start investing with just a little money! Probably the most notable feature, you only require a fraction of what it will take you to go alone as your start-up funds are nowhere near a 20% down payment for a rental property; assuming you qualify for a mortgage. The principle is that several people are also bringing small monies into the pool. This also means that ordinary consumers now have access to properties.
Bigger deals, greater returns
When a lot of investors pull their monies together, it becomes a large pool that can go into bigger property deals with higher rates of return. So whereas you cannot individually participate in big deals or negotiate for a better return with little funds, your bargaining power is stronger with other investors. This means that you are getting higher returns and the same rewards as the big guys; nonetheless with little funds.
Crowdfunding charges are lower than what it would cost to pay a traditional investment manager individually. Because fees are applied to the whole investment, the net charges to an individual investor are little. Moreover, crowdfunding is heavily technology-based and as such eliminates lots of operational issues such as big office spaces, staff, and attendant logistics. So operational cost is low, and hence your returns are maximized.
Share the risk
Investing with others means that you do not bear the risk alone. No investment is risk-free but real estate in itself has relatively lower risks due to its ability to withstand external pressures. By sharing the risk with other investors, its impact on the investment can be reduced to a minimum.
Benefit from others’ expertise
Crowdfunding brings together a team of real estate, finance, and investment professionals with a wealth of experience. It is expensive to hire all these professionals to singularly work for you. But when you join a campaign, you benefit from the expertise of professionals in managing your properties. You do not, therefore, require any real estate knowledge or experience to invest.
Access to commercial real estate through this novelty is a rare opportunity for all to explore. You can start building passive income today with these benefits.