What is Real Estate Crowdfunding?
Despite the long-lived success of real estate investing, it is not an industry known for innovation. Developing technologies have done very little to revolutionize the practice of investing, a fact that is now changing thanks to the advent of crowdfunding.
What Is It:
Just what is crowdfunding? Crowdfunding is a method of raising money through the collective efforts of a pool of individuals. The popularity of crowdfunding has skyrocketed since its inception, leading several industries (including real estate) to capitalize on a new means of raising capital to launch developing projects and investment vehicles. Before crowdfunding, those looking to invest in real estate were often hampered by financial restrictions and limited networks. But due to the Crowdfunding platforms, the real estate investment industry is no longer exclusively available to the well-informed ranks of accredited investors.
How It Works:
Real estate crowdfunding platforms allow investors to access various investment offerings via digital devices, whether at home, in the office or on vacation, and without ever speaking to a broker-dealer. Investors now also have the flexibility to “test the waters” of investment offerings at relatively low entry barriers before committing significant capital to any particular platform.Since comprehensive offering information is also accessible on crowdfunded platforms, investors can quickly compare different offerings and find what best matches their investment goals. Similar to the way people now purchase anything from shoes to groceries online, they now can choose to test real estate investments simply and conveniently.
The New Marketplace:
Tech-based solutions have positively disrupted the real estate investment industry by eliminating financial barriers which previously prohibited widespread participation from large and small investors alike. Thanks to real estate crowdfunding, new investors can now test relatively small amounts of capital on the same types of offerings that have long attracted experienced investors.
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Disclaimer: This information is for educational purposes only, and is not intended to represent investment, tax, or other financial advice. Please consult a qualified tax professional regarding the applicability of the above to your personal situation and the specific requirements and limitations of the above.
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