Real Estate Crowdfunding: Equity Investment

There are two main types of real estate crowdfunding investments at the moment, equity investments and debt investments. Investors need to consider several factors when deciding what investments they are going to take on. Usually, they vary in potential returns, liquidity and level of risk they possess.

In the previous article, we explained what debt or loan investments are about. In this one, we are going to take a close look at equity investments, and explain their strengths, and weaknesses, as well as what they mean for investors.

Related: Article: What is Real Estate Crowdfunding?

When investing in equity, investors own a proportional share of a specific real estate project. The return on investment is based on a property’s rental income and any change in the value of the property project.

Generally talking, equity investors receive higher returns than debt investors. They also receive regular rental income on a monthly or quarterly basis as well as earning income when the property is sold.

However, equity investments are associated with higher risk and longer holding periods than debt investments. The holding periods can vary between 3–10 years or more, which makes them less liquid as well.

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Originally published at https://www.brikkapp.com on February 12, 2020.