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Why RECF is Perfect for Low-Liquidity Real Estate Investors

There are three primary drivers of the rental market in real estate right now. 

               1. Large companies are buying up single-family rentals and holding them in their portfolios long term. This is driving up the cost of real estate and making it unaffordable for a large number of would-be homeowners, especially young millennials and first-time home buyers. This is forcing those potential homeowners to continue renting for a longer period of time.

               2. The job market isn’t the same as it used to be. In fact, the average employee tenure for people aged 45 and younger is less than five years. As a result, people are reluctant to buy real estate so that they don’t get tied up in a mortgage when it’s time to move.

               3. Wages are also volatile. Since people tend to switch jobs more often, their income and benefits packages change more often. Plus, many people are working in the gig economy at least part-time, which means their income fluctuates. It’s difficult to get locked into a long-term mortgage agreement when you don’t know how much money you’ll make, or how much you can save, from month to month.

These factors are driving the current rental market. That’s why more people are renting, and many of them are renting single-family homes. That spells huge opportunity for real estate investors looking to cash in on high demand. But how do you get in on this rental market if you are not highly liquid and cannot afford to lay down huge piles of cash on real estate acquisition?

RECF Offers Rental Opportunities for Investors

Rather than opt out of real estate investing altogether because you lack the liquidity to purchase physical property, why not invest what you can each month in real estate opportunities on real estate crowdfunding platforms?

There are two types of deals investors can get involved with on RECF platforms: Equity and debt.

Equity deals allow investors to own a piece of real estate along with other investors. That real estate can be ground-up construction, fix-and-flip, or rental properties. If you invest in a rental property, you’ll receive monthly dividends from the rental income those properties produce, and when the properties sell you’ll get a portion of the proceeds from the sale.

Debt deals allow real estate investors to get in on a loan with other investors. Rather than loan $100,000 to a real estate investor for property acquisition, repair costs, and more, you might just put in $10,000 and become a partial owner of a loan product. Another word for this is fractional ownership.

Because the rental property market is so hot, there are quite a few opportunities for investors to participate in both debt and equity deals that allow them to become investors in rental properties without the associated headaches.

How to Invest in Rental Properties on Real Estate Crowdfunding Platforms

The best way to get involved in partial ownership of rental properties is to set up an account at a RECF platform like Sharestates and begin looking for suitable properties. Each property deal includes information on the property and the borrower. You’ll be able to compare the risk associated with each deal based on the underwriting criteria used, and you can choose how much you want to invest in each property.

As with any type of investment, you’ll want to perform your own due diligence, but the benefit of real estate crowdfunding is you can invest in real properties without having high liquidity.

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