Real Estate Crowdfunding And The Future of Real Estate Investments
You’ve most likely heard the term crowdfunding but may not be familiar with real estate crowdfunding. Crowdfunding is popular on sites like Kickstarter and GoFundMe that raise money for creative projects or personal endeavors. But that’s not all crowdfunding is good for. Crowdfunding is now having a huge impact in the world of commercial real estate investing, and it may just be the future of property investment all together.
After getting started in 2013, crowdfunding commercial real estate is emerging from growth stages to become a robust and mature marketplace for investors. Real estate Crowdfunding platforms like CrowdStreet allow individuals to access and invest in CRE like institutional investors, but with significantly lower minimum investments. This has opened up the industry to more individual investors, and allowed developers to seek new ways to fund their real estate projects.
How Did Real Estate Crowdfunding Get Started?
Prior to 2012, public solicitation for investment crowdfunding was prohibited in the United States. That changed with the passage of the Jumpstart Our Business Startups, or JOBS Act. Since then Crowdfunding for alternative investments – investments outside the stock and bond markets – has been on the rise, with crowdfunding commercial real estate in particular showing promising growth. As the pool of investors has grown, so has the number of commercial properties available to investors, and the various online platforms used to find opportunities to invest.
The beauty of crowdfunding is that it has unlocked the financial power of the crowd. Where as the high minimum investment associated commercial real estate investing used to limit opportunities to institutional investors and banks, people are now able to make long term investments in projects with historically low minimum investments amounts. Beyond being able to invest in real estate, crowdfunding has made it easier for people to invest in startups and other alternative assets.
As the real estate crowdfunding market has matured so has have the options and marketplaces available to investors. Where as the crowdfunding market used to be a crowded and scattered mess of options, the market today features a handful of serious players that provide higher quality investment opportunities. This benefits investors, as they are able to more easily find quality real estate crowdfunding projects and connect directly with developers.
The Benefits of Commercial Real Estate Crowdfunding Investments
CRE property crowdfunding has opened the door to hundreds of new projects for investors that they otherwise wouldn’t have access to, but it also has additional merits that give it value. From accessibility and convenience, to deal flow and diversification away from the stock market, there are many reasons why investors are choosing to get involved with crowdfunding. Whatever your reason of interest may be, continued growth and involvement in the market bodes well for the future performance of real estate crowdfunding.
Online Accessibility: Today’s world is one on the move, filled with digital tools and convenience. So should we be surprised that people expect the same accessibility from their investment platforms? Everyday more and more investors are joining online real estate crowdfunding platforms like CrowdStreet. With the tools to research, submit offers and manage investments from anywhere with access to the internet, it’s easier than ever to build a portfolio and feel like a CRE mogul.
Deal Flow: Thanks to both online accessibility and the growth of digital equity crowdfunding marketplaces, deal flow for crowdfunded commercial real estate projects has increased significantly. Digital platforms like the CrowdStreet marketplace have given investors access to projects that would have otherwise been nearly impossible to find due to geographic limitations or their facilitation through private networks.
Lower minimum investments: Online real estate crowdfunding sites put direct real estate investment more easily in reach for individual investors. In the past, the ability to invest in a real estate private offering was only available to institutional investors or those able to pony up the minimum investment amount of $100,000 or greater. Now, more people have the opportunity to invest in quality crowdfunded real estate offerings for as little as $10,000.
Diversification: Building a diverse portfolio is important for achieving optimal returns. It also helps protect you against swings in the stock market. The low minimum investments offered by a real estate crowdfunding platform allows investors to diversify their investments, both by investing outside of the stock market, as well as in multiple real estate projects at once. Instead of having your $100,000 portfolio in one project, you can now have 5 different investments for $20,000 each. Investors can even further diversify with access to property crowdfunding projects nationwide.
Customer Service: Not only does CrowdStreet offer opportunities to invest in crowdfunded real estate projects, we also offer a best in class investor relations team to help you navigate the robust marketplace. Whether you’re new to commercial real estate crowdfunding, or an experienced investor, CrowdStreets expert team is here to support your investment efforts with complete customer service.
CrowdStreet is a commercial real estate platform focused on delivering investors the best opportunities to invest and diversify their portfolio with institutional quality investments. By leading the way in the real estate crowdfunding space, we allow investors and businesses to stay ahead of the curve and realize new opportunities as they arise. Discover how the right tools and people can make all the difference in building a portfolio with real estate investing.
Consider Crowdfunding For Your Next Project
Real estate crowdfunding is great opportunity for investors, but it also is a game changer for developers. With access to an entirely new pool eager investors interested in commercial real estate, Sponsors now have more options for real estate syndicating online. Platforms that offer project listings, like the CrowdStreet marketplace, allow investors to seek out your opportunities, rather than having to rely solely on your existing investor communities.
But just because the future of crowdfunding commercial real estate looks promising doesn’t mean you have to abandon your traditional means of raising capital. CrowdStreet investment management software makes raising capital with and managing with your existing private networks easy, and scalable. The only thing that’s changed is that you can now present more people with the opportunity to invest in your projects, and platforms like CrowdStreet make it easy.