Benefits of Real Estate Crowdfunding for Investors: Secrets You Should Know
Why Real Estate Crowdfunding?
Generally, Real Estate Investment in the UK is one which has survived the test of time for centuries. It has been known to create wealth from time immemorial. Some avenues of investing in Real Estate involve buying a property, or owning a Real Estate Investment Trust individually or as a partnership. Recently, the act of Crowdfunding became popular with developers in order to receive the necessary capital needed to start a project. Crowd funders receive their payment within a short period of time with profits, after the project has been sold out. Normally, the whole process takes about a maximum of 36 months. Consequently therefore, we can refer to this as a win-win situation where developers access the capital needed to start their project while investors in turn receive attractive return on investment.
The two types of Real Estate crowdfunding are ‘Equity’ and ‘Debt’ Investment. Equity investment involves investors making contributions towards a residential or commercial property where they get an equity share. All investors then share the income from the rent price of the property. Debt investment on the other hand involves making a contribution towards a mortgage loan on a property. The investors receive their share of the interest paid on the loan as the loan is being repaid.
Qualities to Check
Before delving into the area of Crowdfunding, an investor should do some due diligence. You should research various platforms of investment opportunities. Investigate the founders, especially the management profile of the company so as to learn about their expertise and if they are given to excellence from previous transactions. What are their core values? And have they live up to them? You should be looking for firms among the best investment properties in London. Such that gives adequate details on risk management with the most appreciated return on your investment with customer service that stands out during and after the campaign.
Benefits to Investors:
Small scale investment opportunity: Sometimes, an investor may decide to, or be allocated as low as 300 Pounds as his investment share. Instead of investing 300,000 pounds in only one property, an investor can invest the same amount in various properties.
No investment fees: Unlike Real Estate Investment Trusts, There are no fees involved in real estate crowdfunding, just invest, fold your arms and watch your profit trickle in. The return on investment of a typical crowdfunding opportunity cannot be easily by-passed.
Time favorable: Investment in crowdfunds ranges from as low as 1 year to 3 years. Investors realize their profit in such little time.
Public knowledge: Members of a crowdfund know exactly what their investment goes towards. In what way it is used up, for which period and for which property.
Opportunity to invest in diverse projects: An investor can decide to invest in more than one project per time. In fact, it may be a wiser decision to diversify investments, as this increases return on investment overtime and guide against potential losses. Crowdfunders can choose what to invest in and what not to invest in, unlike REIT.
Tax advantages: Investors are able to receive benefits from breaks such as depreciation and inflation.
Risk Mitigation: The risks inherent in crowdfunding are low compared to other Real Estate Investment avenues. The investor stays abreast of information regarding the project he will be investing in and uses this information to access the marketability of the project, if it is a project which will attract buyers or not? Thereby, serving as a market research for the developer but also having confidence that what he has invested in will bring him his expected return.
Rewards: Many crowdfunding companies put add-Ons alongside their crowdfunding campaigns which come in form of gifts, free products, vouchers, and other company products, free of Charge.
Others: Investors network via meeting new contacts in and outside their community while relishing the fact that you are able to contribute to your local community via the crowdfunded projects. Also, the satisfaction you get from helping businesses develop their idea is sometimes worth more than what money can buy. In addition, you are opportune to learn about various investment opportunities which will be excusive to only crowd-funders.
Investment in property comes with risks as well as the possibility of rewards.
For more information visit here https://www.crowdlords.com/full-risk-disclosure