Real Estate Crowd-funding
Crowd-funding—is not something unheard of. It is a place where new startups or entrepreneurs turn to in order to source capital. Crowd-funding can be labeled as a platform where general public can buy off their share of the pie by investing money at their own discretion. The funding can vary in magnitude, but it has been declared legal by the government of United States of America. In the past crown-funding campaigns were only limited to startups and other fancy projects that caught the masses’ eyes. But things have changed. Now, crowd-funding has also tapped the real estate market and many people are buying real estate by concentrating their funds into a pool and owing rights to a share in the profit. Real estate investment crowd-funding is also called peer-to-peer crowd-funding. This helps the investors to bypass the banks altogether. This is also a good platform for people who are trying out as investors in the real estate market. These funding can prove to be a practice ground for them, as there is less money involved.
So far, not many real estate companies in the US stepped forward and started buying of properties through crowd-funding. Still, one can only wait and see where they will go with this. Here’s what you need to know to stay on top of this growing trend.
The newbies
The entire crowd-funding investment opportunity has a lot to offer to the new-comer. If you want to learn the tricks of the trade or start of investing in real estate for your long term goals, then this is the right platform for you. In the usual real estate business a lot of complicated procedures need to be followed. While in P2P, the fee and intricate bank requirements can be taken care of. With as low as $100 of investment required, you can now place you share in a real estate and claim your share in the pie later..
Homework is the key in real estate crowd-funding
Although crowd-funding requires less money to invest, it still comes with a risk. Since you are buying a real piece of land, it is automatically subjected to the usual risks. You need to make sure that before you invest completely cross check everything about it. From location to occupancy information you need to be fairly discreet. As an agent, you can check all the details about the property at hand and offer this information to the people interested in the crowd-funding for a nominal fee.
Keep checking laws for real estate crowd-funding
As most of it is done online and there is at times no bank involved. Real estate crowd-funding is kept in check by the authorities. This is done so that the investments made by people should not be subjected to theft or risk of any kind. Most of these laws suggest that only accredited investors are allowed to make investments through crowd-funding. They involve investors with net worth above $1 million or individuals with an annual income of more than $200,000.
Still, there are many opportunities available for non-accredited investors in this market. But in order to invest in real estate crowd-funding, they need to be accredited and pre-checked by the US Securities and Exchange Commission (SEC)
In recent times, the JOBS Act of 2012 has definitely relaxed the requirements, but many guidelines exist about how much money can be invested, along with varying steps in the filing process. It is good to understand the laws involved and what is at stake before making your first real estate crowd-funding investment.