Crowdinvesting is expected to continue to grow by the billions in 2016, and if ever there were a time to start investing, now’s the time. Many investors like to diversify their investment portfolio as it can be seen as the best way to limit risk. Below, are five key reasons why real estate crowdfunding presents the best option for potential investors.
Why is Crowdfunding Such a Great Option for Real Estate Investment?
1. Net annualized returns between 10–20%
Though it may sound too good to be true, the science behind such high return rates is in the lack of middlemen. There is no need for broker or private fund fees since the crowdfund is connecting the investor directly to the property. The money that is saved from lack of middlemen adds to the quality of the net annualized return that investors will see. These returns are rare in a low yielding and volatile investment environment.
2. Underwriting systems (due diligence)
Many real estate crowdfunding platforms have extensive underwriting processes for the investments they offer to their investors. Since all data acquired for a risk assessment is shared with investors, these online platforms provide a very transparent experience. A few of the key factors for underwriting are location of the investment property, loan-to-value ratio, and sponsor track record. Underwriting is one of the most fundamental aspects of the crowdfunding process.
3. Overall health of real estate sector in 2016
In PWC’S 2016 edition of Emerging Trends in Real Estate United States and Canada they predict that the year will continue the upward swing for real estate investments. According to this PWC report, the total volume of acquisition for real estate investments, for the 12 months ending on June 30, 2015, was US 497.4 billion. This acquisition volume is up 24.6 percent over to last year. It is predicted that 2016 investors are going to have capital availability greater than or equal to that of 2015. So what does that mean for you? Now, is the time to INVEST, INVEST, INVEST. Attitudes toward the real estate sector are stable and growing more positive daily, and crowdfunding gives you the most control over your investment.
4. Reinvest funds option or withdraw
Still a little apprehensive about investing in real estate? Though we are far from the 2008 real estate market, you may still not be convinced that now is the time to start investing in the real estate sector. Much to the investors’ benefit, the vast
majority of crowdfunding platforms extend the option of withdrawing or reinvesting to their investors. This means that investors can choose to reinvest in another property of their choice, using their earnings. This gives you as the investor even more control over what happens with your money.
5. You can invest side-by-side with billion-dollar institutions
A less-considered benefit of investing with a real estate crowdfund is that in some cases you are investing in properties alongside huge institutions. That not only helps to build your investment portfolio, but it guarantees you a higher than normal ROI depending on the risk associated with of your investment.