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Ever Wondered about Real Estate Crowdfunding? Here’s The Deal
Over the last decade, crowdfunding has become popular as the convenience of technology and apps become more prevalent. Basically, crowdfunding is raising capital for a project such as opening a business or paying a large, unexpected bill using word of mouth or social media.
Real estate crowdfunding works in a similar way – it’s the process of getting a group of investors who may not know each other to raise capital for a real estate project. This gives a chance for real estate investors to engage in the real estate market, and offers non-professional investors a chance to enter the real estate market, who would have not been able to do otherwise due to lack of funds or experience.
Because of the high cost of real estate often cited as a barrier to entry into Vancouver’s housing market, crowdfunding is becoming an increasingly popular financing tool.
So how does it work?A company wants to purchase and develop a $1 million rental property and requires a balance of $750,000. If it cannot secure a loan or mortgage, it can reach out to aspiring investors within their network for the balance or use a real estate crowdfunding platform to raise the funds. The company could offer tranches of $500 or more to those who are interested in investing via the platform. Within a short period of time, the crowd funding investor would easily own a piece of the development without the need for a lawyer, an agent etc.
Pros of crowdfunding real estateIf you are looking to buy a home, or sell your home, contact us as we have offices in Vancouver, Seattle, London and Moscow, and we are firmly established internationally and recognized as a local leader in the real estate market.
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