Investing in Real Estate Investments Through Crowdfunding Platforms
Real estate investments are defined by Wikipedia as “The exchange of certain real goods or services for money that can be bought or sold in the future.” The real estate market encompasses a number of investments including apartment buildings, townhouses, row homes, condominiums, mobile homes, office buildings, warehouses, preconstruction land, and vacant land. Real estate investment entails the purchasing, holding, management, investment and/or sales of real estate as a profit making venture. In short, real estate investments are real goods or services that can be bought in exchange for money. A real estate investment program is usually seen as a sub-speciality of commercial real estate investments known as commercial real estate investment.
Commercial real estate investments are very common and a popular avenue for many small-time investors. The popularity of commercial properties is due to the fact that they have a shorter term risk and a significantly higher potential for appreciation than residential properties. Also, commercial properties are able to cater to a large number of investors from different backgrounds, thus facilitating the investment in a diverse range of areas and communities. While residential real estate investments usually require one to own a lot of property, a large number of investors are able to realize significant profits with smaller and more localized investments.
Crowdfunding platforms offer investors an opportunity to invest in real estate without having to meet up with a private lender. This is a big advantage as most conventional lending institutions usually do not provide loans to small and inexperienced investors. Additionally, investors need to meet strict requirements before being able to access capital from investors. Most importantly, the need for approval of loans from banks and other lending sources is a factor for traditional investors. For instance, there are a number of accredited investors who will not provide funding unless there is a secure future need for such funding. Also, most accredited investors usually ask for guarantees or co-signers to provide evidence of their solvency.
Unlike traditional real estate investments, the risks associated with investing in real estate investments through Crowdfunding platforms are comparatively less. The reason for this is that the risks are spread out amongst a larger number of investors. Most real estate crowdfunding platforms will provide an option for investing in multiple units. This is important as it reduces the risk that an investor will lose all his funds by investing all in one unit. In addition, most investors are able to choose the size of the investment.
Another benefit of investing in real estate through Crowdfunding platforms is that it allows investors to purchase real estate properties at prices that are far below market value. As an investor, you would be able to reduce your expenses, while still generating a high return on your investment property. This is possible because the expenses incurred for such investment property do not include any of the investor’s fees. The cost of acquiring the property and any legal fees are borne by the buyer when he makes an offer to purchase such investment property. In this way, you can enjoy significant tax benefits on the property that you purchase using your investment property.
Real estate investments in the United States are currently experiencing a boom and there is a constant increase in the number of properties that are being sold. The reasons for this boom in the residential real estate markets are varied but include the current trend of moving to the urban markets, improved infrastructure and supply of supply, and improvements in the efficiency of the real estate management systems. The growth of such properties in the urban markets has also led to an increase in the demand for properties available for lease or rent, which has caused rents to steadily rise.