Real estate investment has long been considered a lucrative endeavor for investors. With the advent of crowdfunding, this type of investing is now more accessible than ever. Crowdfunded real estate investment offers a number of benefits for investors, ranging from lower costs and fees to diversified portfolios. Let's explore the key advantages of crowd-funded real estate investment.
Smashing the Entry Cost Barrier
Crowdfunded real estate investment has become increasingly popular due to its relatively low cost of entry, making it accessible to a wider range of investors. Traditional real estate investments require a significant amount of upfront capital to purchase a property, with the average cost of a home in the United States being $389,400 as of January 2023. In contrast, crowdfunding platforms allow individuals to invest in commercial real estate with as little as $5,000 or even less. This provides investors with the opportunity to diversify their portfolios without requiring a large initial investment. Additionally, according to a study by the crowdfunding platform Fundrise, the average investor on their platform has invested in 12 different properties, demonstrating the ease with which investors can spread their investments across a range of properties. Overall, the low cost of entry and the ability to diversify are major advantages of crowdfunded real estate investment.
Divide and Conquer
One of the key advantages of crowdfunding is the ability to diversify your portfolio across multiple real estate investments. Traditional real estate investments often involve a significant upfront investment, which can limit an investor's ability to diversify. In contrast, crowdfunding platforms allow investors to invest in multiple properties across different markets, spreading their risk and potentially increasing their returns. According to a study by the crowdfunding platform RealtyMogul, investors on their platform typically invest in an average of six properties, with some investing in up to 50 properties. This level of diversification allows investors to reduce their exposure to any single property or market and potentially improve their overall returns. Overall, the ability to diversify across multiple properties is a major advantage of crowdfunding as a real estate investment option.
Less Cost, More Profit
One of the key advantages of crowdfunded real estate investments is the lower fees and expenses associated with this investment option. Compared to traditional real estate investments, crowdfunding platforms typically charge lower percentage fees on your investment. According to a study by the crowdfunding platform CrowdStreet, the average fee charged by crowdfunding platforms ranges from 0.5% to 2% of the investment amount. In contrast, traditional real estate investments can involve higher fees, including broker commissions, appraisal fees, and legal fees. Additionally, because crowdfunded real estate investments allow you to invest in multiple properties, you can spread out your fees and expenses, potentially reducing the overall cost. This can be especially beneficial for smaller investors, who may not have the resources to cover the high fees associated with traditional real estate investments. Overall, the lower fees and expenses associated with crowdfunded real estate investments make it a more accessible and cost-effective option for investors.
Access Your Investment On Your Terms
One advantage of crowdfunded real estate investments is the increased liquidity compared to traditional real estate investments. Traditional investments can involve a lengthy and complex process to liquidate assets, which can take months or even years. In contrast, crowdfunded real estate investments offer more flexibility, with many platforms allowing investors to liquidate their investments within a few days or weeks. According to a study by the crowdfunding platform Fundrise, their investors have the option to sell their shares on a quarterly basis, providing them with more frequent opportunities to access their funds. This increased liquidity can be especially important for investors who need to access their funds quickly in case of emergencies or changing financial situations. Overall, the increased liquidity offered by crowdfunded real estate investments provides investors with more flexibility and access to their funds compared to traditional real estate investments.
Share the Love and Grow the Money
Crowdfunded real estate investment offers a unique opportunity for investors to access the commercial real estate market at a relatively low cost. With crowdfunded real estate, investors can pool their funds together to invest in a diversified portfolio of properties. This allows investors to spread their risk across multiple properties and potentially earn a higher return on their investment.
Furthermore, investing in crowdfunded real estate provides investors with a hands-off approach to real estate investing. Investors can rely on professional management teams to handle property acquisitions, maintenance, and tenant management. This frees up time for investors to focus on other areas of their life while still benefiting from real estate investment returns.
Overall, crowdfunded real estate investment offers many benefits for investors, including low-cost access to commercial real estate, increased liquidity, and a hands-off approach to real estate investing. If you are looking for an alternative investment option, then crowdfunded real estate could be the right choice for you. However, it is important to carefully consider the risks and do your due diligence before investing in any investment opportunity.
Synthesis Investment Capital London is a private equity firm established in 2002, investing in small to mid-sized companies in the UK and Europe. They specialise in growth capital, management buyouts, and buy-ins across various industries. With a strong focus on adding value and responsible investing, they have a proven track record of executing complex transactions and generating attractive returns.
Real estate investment has been a popular and lucrative avenue for investors for many years. However, historically, it was only accessible to a select few with significant financial resources. The emergence of crowdfunding has revolutionised the real estate investment landscape, making it more accessible to a broader range of investors.