Property Real Estate Crowdfunding Platforms
Property real estate crowdfunding platforms enable non-accredited investors to invest in a range of property-related investments. These may include development projects for new commercial or residential properties or the pooling of funds to provide financial backing for existing real estate holdings, known as a real estate investment trust (REIT). REITs are often considered safer than single-property ownership because they generate dividends and have historically high returns with less volatility than most other asset classes. However, they can still be illiquid, meaning you won’t have the option to easily convert your shares into cash. For more info https://www.sellmyhousefastntx.com/we-buy-houses-fast-little-elm-tx/
Some property crowdfunding sites focus on providing access to REITs for a low minimum investment amount, including Fundrise. This platform offers 14 funds with account minimums starting at $10, targeting both accredited and non-accredited investors. Investors can choose a custom portfolio allocation or allow Fundrise to select one for them based on their investment goals and timeline.
Other real estate crowdfunding platforms offer a wide variety of investment opportunities for higher minimum investment amounts, often targeting accredited investors. These might include CrowdStreet, a website that gives investors access to commercial property investments that aim for high rates of return and 1031 exchange opportunities. Investors also get the added benefit of a minimal due diligence process in which CrowdStreet conducts background and reference checks for developers soliciting financial contributions from investors.
These platforms often operate as an intermediary, connecting a potential investor with an experienced developer or project manager. Potential investors can view a description of the investment opportunity, including its projected returns and risk. They will then be asked to provide a sum of money for an equity share in the project, or loan money to the development company in exchange for a fixed interest rate and repayment terms.
The property is then either bought or transferred into a special purpose vehicle created for the project, known as an SPV. This ring-fences the property from any other assets of the crowdfunding site and its parent company, reducing the risk for investors should something go wrong with the platform or the property. This also allows individual investors to sell their stake in the project at any time on a secondary market, giving them the ability to quickly recoup their initial investment.
If you’re considering investing in property real estate crowdfunding, it is important to speak with a CPA or financial advisor before making any decisions. They can help you determine if this is the best investment method for your situation and can discuss any tax considerations. If you’re an unaccredited investor, be aware of the limits imposed by the Securities and Exchange Commission on how much you can invest in real estate crowdfunding within a 12-month period. These are based on your yearly income and net worth, so be sure to do your research before investing in any opportunity. For more information, see our article on Investing in Property Real Estate Crowdfunding Platforms.