RE crowdfunding is a type of real estate that is just beginning to bloom. It’s providing more accessible opportunities for developers and investors alike, allowing more people to collaborate and develop properties than ever before.
Real estate crowdfunding (REC) employs new solicitation laws to garnish the investment of a “crowd” of accredited investors, rather than just a select few lenders, to reduce risk and increase availability of funding needed to get a project going.
But where does an investor begin? Whether you’re a seasoned investor, or new to the game, here are some tips on how to get your foot in the door.
1. Research different platforms
I currently know of about 8 different crowdfunding platforms, and I wouldn’t be surprised if more were springing up as we speak. But each one of these platforms is unique and provides different opportunities for investment. Most platforms will provide ample information to get a general idea of what the platform does, its goals, and how it’s different from the rest.
RealtyShares, for example, focuses on helping investors diversify their portfolios. Fundrise is a community-based platform that allows members of a local community to contribute shares as low as $100 to help blow up a project. Patch of Land prides itself on being 100% transparent and available to investors about their projects, encouraging conscientiousness in financial practice on the part of all involved.
2. Single-family home refurbs
RE crowdfunding affords opportunities for both residential and commercial investment. But if you’re just starting off, single-family home refurbishments are a great way to get your feet wet. They are small, low-risk, and fairly quick — the deal matures within 6-18 months. They are also in high demand, so it’s very likely the property will be used well, given the platform chooses a conscientious developer. These kinds of refurbs allow you to act through a straightforward loan, so the practical details of investment are not as complicated as they could be.
3. Examine the social good
Investment becomes more fulfilling when you know it’s going to a good cause. Even an average residential refurb is a good cause, but there are some unique opportunities offered in RE crowdfunding. For example, Patch of Land recently launched a large, crowdfunded $750,000 rebuild of properties damaged by Hurricane Sandy.
Your money can go a long way to lend a hand to your fellow man. Don’t pass up the opportunity to use your funds where they’re coveted the most — those you help will be thankful.
Real estate crowdfunding is an exciting industry allowing investors to come together and pool their resources like never before to accomplish great things. Do some diligent research about platforms, laws, and procedures in the beginning. As you invest in small projects you’ll gain knowledge you can only acquire through experience. Once you get the hang of things, branch out and let your money support others who are doing great things in our communities.
With diligence, commitment, and patience, RE crowdfunding can be a powerful way to become influential, working as a team with others to develop our cities — and make money in the process.
Meg Baatz is on the marketing team at Patch of Land, a platform that’s growing out of new RE solicitation and crowdfunding laws to help fulfill RE opportunities formerly impossible with REITs, mutual funds, and traditional investment. Save time and be in control of your investment shares at PatchOfLand.com.
