The stock market may be in flux; the country’s political landscape may be a volatile mess. One thing is certain, crowdfunding and marketplace lending (MPL) provides stable, lucrative income opportunities. Keys to investing in marketplace lending include things like surveying the field for the best platform, researching the investment opportunities, and of course, finding the most lucrative returns.
And then what? After selecting an appropriate crowdfunding platform, what’s a savvy investor to do? Invest!
Marketplace Lending Basics
For newbies, crowdfunding and peer-to-peer lending fall under the umbrella of MPL. The MPL phenomena gained traction in the late 2000s. MPL grants individuals the opportunity to participate in the purchase of big-ticket items like real estate, loans, and pretty much anything of value. An online platform, like Sharestates, provides users a selection of goods (in this case, properties) needing funding.
The platform allows users to purchase/fund a portion of the goods up for grabs. Most crowdfunding platforms require minimum investment amounts and all offer some kind of return. Real estate crowdfunding delivers some of the best returns. For example, Sharestates’ properties average annualized returns in the eight to 12-percent range.
Furthermore, MPL presents real estate owners and developers a convenient opportunity to fund their projects. Securing funding through MPL is usually quicker and more attractive than conventional funding sources like banks.
Choosing the Right Marketplace Lending Investment
Once a user selects their desired marketplace lending website, the next step is to research the funding/lending opportunities. For real estate investors, this entails analyzing the properties. Things to consider include its location, comparable structures, age, after repair value (ARV), loan amount, loan-to-value ratio, and the expected financial return. Be quick! Savvy investors recognize a profitable property when they see one.
Also, smart real estate investors diversify their portfolio by funding all sorts of properties. For the ultimate diversification, consider properties like land, condos, apartment complexes, mixed-use properties, houses, retail locations, and even retirement communities.
As mentioned earlier, a marketplace lending opportunity includes anything of value. In addition to real estate, this could also encompass filming ventures, personal loans, and more. Investors should weigh the risks, pros and cons, and decide which venture fits best in their portfolio. Some MPL projects, like films, actually offer early release versions as a return on the investment.
Post-Investment Tips for Real Estate Investors
Don’t fall into the post-investment slumber. For real estate investors, stay busy researching new projects and properties. Read up on the latest office renovation trends, or home renovation trends. Learn all there is to know about each major city and which provide the most lucrative real estate opportunities. Staying ahead of the curve now, makes for quicker, future investment decisions.
For instance, 10 different cities in California were listed atop Realtor.com’s 20 Hottest Markets’ chart. Professional real estate investors keep this sort of info nearby in case they stumble upon an investment opportunity in lucrative locales.