It is important to remember that not all real estate deals are created equally. In fact, quite the opposite tends to be true. Typically larger investments have higher rates of returns and have more success. This makes investing in real estate quite a hassle if you aren’t adequately capitalized. It can be discouraging as an investor to know that you are missing out on good investments just because you are not wealthy or you do not have a large amount of capital that is liquid and ready to be invested. For many years, real estate was an investment that only the well-off were able to afford, despite it having many attractive features that would no doubt lure investors of all backgrounds. This is where crowdfunding enters the picture.
Crowdfunding is a recent phenomenon that has revolutionized the way investors look at putting their money to work. Innovation in finance is nothing new and crowdfunding is certainly no exception. Pulling resources as a group or community allows people to pursue investments that previously were not attainable to them. It takes quite a bit of capital to invest in most real estate opportunities. However, crowdfunding is changing the real estate investing landscape by making it possible to get in on deals with far less capital. Crowdfunding for real estate is an innovation that brings in more working class people and gives them new real estate investing opportunities that they might not otherwise have access to. Crowdfunding for real estate investments is a win-win situation. The investor and the debt holder are both given more flexibility and more opportunities. This is a fundamental change in real estate investing that will likely bring about permanent changes to not only the real estate industry but also the way that people look at investing as well as personal finances. To make all of this possible there needs to be something that has the ability to bridge the gap between investors (lenders) and debt holders (the people executing on the real estate investments). The bridge between these two groups is offered by crowdfunding real estate platforms. Crowdfunding real estate platforms simply offer a channel in which the two groups (lender and debt holder) are able to meet and connect.
Often times, crowdfunding real estate platforms take a small cut for offering the service of bridging the gap between investors and those executing real estate deals. However, the fees that are typically associated with this form of investing are relatively small in nature when compared to fees in other financial arenas. All in all, this is a form of investing that opens up investing in real estate to a whole new group of people. This is no doubt an innovation that is shaping multiple industries and will continue to for years to come as crowdfunding services iterate themselves and continue to evolve into a more practical and common service.