Crowdfunding has become immensely popular in recent years. Simply by creating a page for a project or goal, an individual or company can generate capital to make their dreams a reality. It has changed the way in which people appeal to other people for money. The benefits of crowdfunding are considerable.
Did you know that crowdfunding as a concept can also be applied to real estate investment? It’s true. For as little as a hundred dollars, you can take advantage of this new method for investing in a property. As you can imagine, crowdfunding has become a considerable game-changer in the world of real estate investment.
Real Estate Investing And Crowdfunding
With crowdfunding and real estate, consider some of these interesting statistics:
• There were over 5600 Reg D offerings pertaining to real estate between 2009 and 2012.
• The average preferred return for a backer is around 8.5 percent. The figure can be anywhere between 5.0 percent and fourteen percent.
• The average size of real estate offerings between 2009 and 2012 was roughly fifteen million.
Real estate is growing rapidly. In 2012 alone, it was second only to non-financial issuers, in terms of having the greatest number of participating backers for all Reg D offerings. Each syndication throughout 2012 had an average of twenty-five backers. Between 2009 and 2012, over sixty-three billion was raised for real estate private placements. When you consider numbers like those, it’s easy to start to get a little excited.
Real estate crowdfunding is actually quite similar to equity crowdfunding, in the sense that it utilizes the potential of individual backers, rather than a small handful of groups. The property’s developer creates a page with all the relevant details concerning the property. They will want to work with a website that specializes in offering this service. When the property listing and other information has been vetted properly, it will be published on the site. Visitors can then examine the opportunity, and decide if it’s something they want to take part in.
When enough people have submitted their letters of intent, an LLC is formed. This LLC will receive dividends, which are then given out amongst the backers as an ROI.
The number of websites that are taking advantage of crowdfunding and real estate are growing. Fundrise and Realty Mogul are just two possibilities that are attracting backers and others. As you’re going to discover pretty quickly, there are even more websites out there worth looking at.