Real Estate crowdfunding is a type of investment strategy that is just beginning to bloom. One of the main attractions of this new phenomenon is the ability for it to provide more accessible opportunities for developers and accredited investors alike. The additional networking capability of online web portals has allowed more people to collaborate and help grow communities faster and more efficiently than ever before. So where does an investor begin? Whether you’re a seasoned vet, or new to the game, here are three helpful tips to guide you in the right direction:
1. Research Different Real Estate Crowdfunding Platforms
There are many different real estate crowdfunding platforms online, and there will certainly be many more popping up as the idea continues to increase in popularity. While many of these platforms offer similar services, it’s important to understand that they are not all the same. Some portals only host equity-based deals on their platform, emphasizing a primary focus on commercial real estate. These kinds of opportunities evolve around long-term debt with a higher associated risk. Other portals, like Patch of Land, offer short-term high yield opportunities that typically only take between 9-12 months to mature. Both kinds of crowdfunding methods are viable options, so it really all depends on your needs as an investor. I highly suggest researching the different real estate crowdfunding sites and seeing what kind of opportunities are available. In any case, it’s always important to do your own due diligence and discover the benefits and risks involved. Patch of Land prides itself on being 100% transparent in regards to their projects, encouraging conscientiousness in financial practice on the part of all involved.
2. Single-Family Home Rehabilitation
Real Estate Crowdfunding affords opportunities for both residential and commercial investments. However, if you’re not trying to tie your money up in a long-term deal, single-family home refurbishments are a great way to go. They are small, low-risk, and have a quick turn around — the deal matures within 9-12 months with a return on investment between 10-18%. Patch of Land specializes in putting fix and flip projects on our portal because we believe this is a sound investment strategy with more positives than negatives. Furthermore, our ability to lend to a network of professional real estate developers with outstanding track records gives our investors a sense of security, knowing that their investment is in good hands. Visit our homepage to discover how Patch of Land’s real estate crowdfunding portal serves both investors and borrowers.
3. Examine the Social Good
Whether you believe in karma or not, it’s safe to say that a project with a positive impact on its community is almost destined to be a money making opportunity. Why is that? The main reason is because you are fulfilling a need that’s in high demand. For example, Patch of Land is working towards rehabbing homes that were affected by Superstorm Sandy. Investing money in those properties is a sound investment because you are certainly going to make money from the fix and flip, but simultaneously you are lifting a community back on its feet. By revitalizing a neighborhood, you are increasing the property values in the surrounding areas as well, which means you are creating more potential opportunities to do the same kind of projects in the surrounding areas. Patch of Land believes growing communities and building wealth go hand in hand. Therefore, we encourage you to examine the social good before investing your money in a project just for the sake of investing.
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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.
Do you have any sound advice for people looking to get into real estate crowdfunding? Leave us a comment and let us know what you think.
