Less than a decade after the 2012 JOBS Act, which allowed entrepreneurs to raise money publicly, crowdfunding continues to enjoy massive popularity. The industry has expanded remarkably as industry experts predict positively about the future of crowdfunding real estate.
Real estate crowdfunding is a straightforward, quick, and effective way to make money work for you. It has made real estate investments more accessible and also offers improved security over the traditional model. This article examines the current outlook and the future of crowdfund real estate platforms.
Crowdfunding Growth Trends
As real estate crowdfunding platforms recover from the global recession, some are suspending redemptions to save equity and maintain stability. Nevertheless, the future of real estate crowdfunding looks bright, with analysts predicting massive growth in the coming years.
Recent real estate crowdfunding statistics source reports that crowdfunding real estate investment will grow by $196.36 billion from 2021 to2025. With the increasing presence of crowdfunding campaigns on social media platforms, crowdfunding becomes more accessible and more convenient for raising funds.
Perhaps the most intriguing outlook of real estate crowdfunding is that it may soon surpass the traditional models. Some experts predict that real estate crowdfunding could quickly establish itself as the primary raising of real estate properties.
Crowdfunding Real Estate Platforms
Crowdfunding presents one of the simplest ways to get involved in real estate. While there are different crowdfunding platforms available for real estate investors, it’s best to choose wisely. Without adequate information, it’s pretty easy to get submerged in a host of options. Nevertheless, it’d help to consider a crowdfunding platform’s credibility, site functionality, record keeping, and customer service quality.
Moreover, it’ll help to choose a platform with adequate prior experience in handling real estate investments. And if the company has enough “skin in the game,” that is. have high stakes in the acquisition, they’ll be likely more productive.
Before concluding on a real estate crowdfunding platform, ensure that the site has a formidable capital footing. This would prevent your investment from being locked up for a longer time than necessary. Also, ensure that the platform demonstrates credibility and looks to remain in operation over a long time.
Find out about the documentation the company carries out before closing potential deals. How much due diligence does the platform conduct before choosing a specific property? Also, ask about what the companies do to give indemnities to investors if things go wrong. And for their customer service quality, confirm that they give prompt and adequate information to customers seeking answers.
Since there are many platforms available, you’d want to settle with a platform that meets the above requirements. The good news? With Holdfolio, you can find all the above conditions of a real estate crowdfunding platform in one place.
Holdfolio is one of the few crowdfunding real estate investing platforms accessible to non-accredited investors. Since 2014, Holdfolio has completed at least 74 deals, with investors’ average yearly returns (net fees, etcetera) at 19.5 percent. On due diligence, Holdfolio themselves own the properties they campaign for, imposing a strong incentive to find quality properties.
With a minimum investment of $20,000, investors could access between 8 and 20 percent in returns. Furthermore, investment options range from single facilities to multifamily real estate properties across different states. Holdfolio also boasts an excellent customer support and interaction system.
Pros and Cons of Real Estate Crowdfunding
As you can expect with any other funding means, crowdfunding has its fair share of merits and demerits. Intending crowdfunding sponsors and investors would do well to arm themselves with these details as they make their plans.
- For investors who had difficulty with other traditional finance options, crowdfunding is a viable alternative to accessing finance
- Real estate crowdfunding also poses a channel for testing the public’s perception of your project/idea. Much public interest in the campaign is a good sign that your project will fare well in the market
- Sharing your idea also helps to readily receive feedbacks and expert counsel on how to improve on it
- Crowdfunding presents a fast way of raising money for a project without any upfront fees. Starting a crowdfunding campaign for your project is as straightforward as signing up with a crowdfunding platform. Signing up could sometimes be as quick as ten minutes—after which you can begin sourcing funds from the public
- Pitching your real estate project through online crowdfunding platforms can create a viable means of marketing. Your idea/project could attract sufficient media attention before it gets actualized
- Other than getting financing for the project, you could win your most loyal customers through the investors
- Crowdfunding is a relatively simple method of raising money. You can get funding from unaccredited investors without being bogged with complex legal issues
- Crowdfunding makes it possible to get funding for great ideas which don’t suit accredited investors
Despite the several advantages of real estate crowdfunding, there are some crucial disadvantages to the finance sourcing option..
- Successful crowdfundings aren’t a walk in the park simply because campaigns are easy to set up. There isn’t any guarantee that it’ll be easier to access funding through them over traditional financing options. Caveat: not all projects that signed up on crowdfunding platforms got off the ground
- If the crowdfunding sponsor doesn’t meet the finance target, any equity pledged is returned to investors. Unfortunately, the sponsor ends up receiving nothing under such scenarios
- There’s the risk of damage to the sponsor’s personal or brand reputation if the idea fails
- Unless you can protect your idea by a patent or copyright, someone may find it online and copy it. Broadcasting your proposed project exposes the owner to the risk of being overtaken by competitors with more finance. If they beat the owner in their game, the original sponsor could lose significant potential market share
- An inadequate grasp of your reward system could mean paying investors more than they deserve on the business
Real estate crowdfunding is currently gaining momentum as it enables people without much financial power to enjoy passive investment returns.
However, before starting your crowdfunding investment journey, you’ll need to understand the future of real estate crowdfunding, market trends and know the pros and cons.To get started with real estate crowdfunding, contact Holdfolio today and register to earn passive income.