Once the real estate investment itch sets in, it’s hard to satisfy it. There are several aspects of investing to consider before plunging into the your first investment property. Establishing an investing budget is the first, and most important. Other considerations include devoting enough time to learn about each property, analyzing local markets, and staying abreast of real estate trends.
Before the new millennium, real estate investing involved sending large sums of money to firms and developers. Investors needed fat pockets and an influential circle of realtor friends. Now, thanks to marketplace lending, specifically crowdfunding, anyone with the desire to earn consistent returns and the minimum funding requirements can tap into real estate investing.
Marketplace lending relies on hundreds of individuals to purchase portions of loans that fund real estate acquisitions. This presents developers and owners a quicker method of securing financing, compared to more traditional lending options.
Like with any investment, individuals who invest in crowdfunded properties receive steady returns on their stake in the investment property. These returns average between eight and twelve percent. For instance, a crowdfunding platform lists a home for $500,000 with an expected return of 10 percent.
An entrepreneur decides to invest the minimum amount of $1,000. Based on the 10-percent return of investment, the investor receives $100. Real estate crowdfunding garners steady, reliable returns that surpass most other investing platforms.
Plan and Budget Before Purchasing Your Investment Property
Before making any investment decision, investment gurus recommend creating a plan and a budget. These should specify the amount of money allocated for investing. Click here for help creating an investing plan.
Diversified Real Estate Portfolio
It’s never a good idea for an investor to stash all her eggs in the same basket. Research all of the options available for investing, including land, apartment complexes, condominiums, retirement facilities, retail spaces, and private homes. Extensively examine each property and its respective locale. Observe the market trends. Does the area need another coffee shop? Do hair salons already saturate the area?
The same is true when investing in fix and flip properties. Read the details of the intentions for each structure. Compare neighboring properties and their sale price. What is the average time similar homes spent for sale? Do your philosophies align with the crowdfunding site? When in doubt, contact a member of the management team.
Reputable marketplace lending sites like Sharestates make it easy for investors to ask questions.
Can Anyone Invest in Crowdfunding?
Many crowdfunding platforms only permit accredited investors to purchase shares of properties. According to the Securities and Exchange Commission (SEC), an accredited investor is one with assets totaling over $1 million or one whose income totals at least $200,000 annually. However, more sites now approve non-accredited investors.
Real Estate Investing Requires More Than Money
Selecting the most lucrative investment opportunities requires more than a little money. Like other any other investment, it takes adequate time and research to choose the best investment property. Read your crowdfunding site’s blog to stay up to date on news and related info. Realtor.com is another helpful tool. They often produce monthly reports on the top cities with best housing markets.