What is real estate Crowdfunding?
The real estate market is renewed through alternative methods of investment through which you can access real estate anywhere in the world.
Investment in real estate is back. And it's coming back with a transformation that matches this new age of innovation and technology, using a novel system: real estate Crowdfunding, or collective project financing.
This method works like traditional Crowdfunding, but with a few small differences. Here, sector experts propose projects that could have high profitability, and investors decide which real estate they want to invest in, including dwellings, hotels, establishments, etc. To select these projects, they tend to look especially at real estate that is well-located in large cities, and each investor holds a percentage of this property proportionate to their initial investment.
Up until now, real estate investment was reduced to large capitals or banks to intermediate between purchasing real estate and the individual. However, real estate Crowdfunding turns small savers into players in the sector, since they can invest in real estate with amounts such as 50€ or 100€, depending on the platform and the project. Some companies call this 'democratisation of the real estate market,' since before purchasing large projects was limited to the few, and now many more can choose to invest in this sector.
This collective financing method has discovered a new market, leading to a revolution. An intermediary is no longer necessary. A huge fortune isn't, either. With real estate Crowdfunding websites, you can co-finance projects anywhere in the world with small amounts of money. This gives you many opportunities, such as investing in an apartment building in New York, an office building in London, or a Parisian hotel.
What do owners get from this investment? Just like with a musical project, real estate Crowdfunding investors receive a profit, a compensation. In this case, it would be part of the income from renting the dwellings and their sale later on.
Regarding the possibility of losing money, just like with any other investment, there is always a risk. However, with real estate investment there is always an asset underlying the capital, so total loss is practically impossible.
So, when did all of this start? It started with the first company in Washington, FundRise. In 2011, it raised 300,000 dollars on the Internet to invest in a housing development.
The next year, Barack Obama approved the Jumpstart Our Business Startups Act, known as the JOBS act, and the investment system was copied. In 2013, the real estate Crowdfunding model spread, and the first platforms in the United Kingdom came to being. In 2014, real estate Crowdfunding continued its expansion in Europe. In 2015, the last remaining barriers in the USA were removed, and the number of companies and investment volume internationally burgeoned.
This opens up an alternative, ground-breaking age in the real estate industry with Crowdfunding, where the present is already the future.