Real Estate Crowdfunding

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Real Estate Crowdfunding, ,Alternative Finance Sector Report - October 2014 15
REAL ESTATE CROWDFUNDING
ALTERNATIVE FINANCE SECTOR REPORT
PUBLISHED
October 14
AUTHOR
Samantha Goins
Conclusions
Real estate is a well -understood and
established asset class providing a range
of investment benefits. The diversity of
the sector enables investors to capture a
variety of investment benefits to suit their
needs and overall portfolio strategy.
Crowdfunding is an alternative to
traditional financing where savers and
borrowers come together on an online
platform. Investments can be donations
or reward based, but the investment
crowdfunding strategies (debt and
equity) are an extremely effective way
for businesses to raise capital for various
projects and activities. In recent years the
big major lending institution and banks
offered disappointing interest rates and
been reluctant to lend, so the popularity
and use of the crowdfunding model has
soared.
Before the development of crowdfunding,
real estate investors were stuck with high
minimum investment and transaction
costs or completely unable to invest.
Since the application of crowdfunding
to real estate investing the dynamic has
changed, more investors can access this
asset for a lower cost and while enjoying
the same portfolio benefits as a direct
investment. Minimum investments can be
found as low as $100 in the market.
Commercial and residential properties
are well-established investment products
that can provide strong returns in key
locations. Real estate crowdfunding
platforms exist in several of these areas
and are enabling investors to achieve
above average returns on all types of
investment structures.
Crowdfunding comes with a number of
unique risks that investors should be
mindful of and consider when assessing
potential investment opportunities. Due
diligence is essential and should be
carried out when considering any real
estate investment opportunity, as risk and
return varies depending onthe risks and
returns can vary dramatically by location
and project.
Real estate can have several
roles in a portfolio – growth,
income, aggressive or defensive
diversification and a hedge against
inflation
The crowdfunding model can benefit
real estate developers by saving on
cost and time as well as reaching a
large investor audience
Investors can also benefit from
crowdfunding, saving on transaction
costs and the ability to easily diversify
Returns from real estate
crowdfunding projects are often
forecasted much higher than the
market averages in key locations