For centuries, real estate has been one of the best ways to create wealth. Before real estate crowdfunding was an option, real estate investment trusts (REITs) were the only way to enter the market. But, thanks to crowdfunding, what was once an exclusive club is now available to anyone. For a number of reasons, crowdfunding real estate investments appeal to a wide audience. This is because it requires a small amount of capital, produces more options and allows for direct access. Still, you may wonder what the advantages of working with accredited investor crowdfunding sites are. The truth is, there are many.
First, let’s go over who is seen as an accredited investor. The SEC has defined these investors as individuals or entities that are allowed to invest in securities that are not registered with financial authorities. In order to gain this ability, one must become an accredited investor. This is done by meeting the requirements for income, net worth and/or asset size. These requirements include, an annual income of $200,000 individually or $300,000 for joint income, over the last two years. The SEC also considers any individual with a net worth of over $1 million an accredited investor.
The difference between accredited and unaccredited investors lies within their income and asset value, as mentioned above. However, there is more to this. For over 80 years, only accredited investors had access to private investment deals, real estate included. And, these investors needed to know the right people to get in on the deal, as well as have a large sum of capital at hand.
With that in mind, we move to 2008. This is when the JOBS Act was put into place. This act enabled companies to go to the general public and seek funding for investment opportunities. Therefore, allowing more accredited investors to invest. This was followed up by the passing of Regulation A+, which opened up the doors even more. With this bill, companies gained the ability to advertise to all investors. Yes, both accredited and unaccredited.
Since the passing of these regulations by the SEC, crowdfunding real estate has seen a boom. With more investors pouring in than ever before, platforms like ours are seeing exclusive real estate deals fulfilled in record time. While there are many benefits, you’re probably starting to wonder why choosing an accredited investor site is a good idea.
Unlike investing with REITs, crowdfunding is a direct investment. One of the biggest advantages of crowdfunding investments is that investors can directly contribute to the project of their choice. There’s no need to hire a middleman to invest your money for you. Before, the value chain of real estate investments made it difficult to gain a significant return. The developer, initial investors and REITs took the bulk of the earnings first. Therefore, in order to succeed in real estate investing, you need to invest higher up the value chain. This is where crowdfunding comes into play. This method cuts out the middleman,. Therefore, reducing the costs of investing and increasing the accessibility of investing. You can almost double your return by choosing to invest with crowdfunding instead of REITs.
In the aftermath of the 2008 recession, the public’s faith in traditional institutions has been unsteady. With this, crowdfunding has taken root. Investors are much more conscious with how they spend money now, and crowdfunding has allowed them to be choosier.Additionally, crowdfunding provides opportunities even during periods of recession. Crowdfunding real estate investments are a direct property investment, so individuals can better diversify their portfolios.
For many years, real estate investing was a hard market to enter. The minimum threshold to invest was typically at least $100,000. Plus, it was difficult to gain insider knowledge about investment opportunities. It was also important to make and maintain many connections since private securities could not legally solicit investments. With crowdfunding real estate, the old rules have been thrown out the window. You no longer need to fork over $100,000 or more to enter the market. Instead, you gain access to so many projects, the hardest part is picking out the right project for your goals.
With DiversyFund, starting and setting up your portfolio is simple. We aim to create a transparent platform and make investment opportunities more accessible to you. By registering, you will gain access to all of the available investments listed on DiversyFund. Then, it’s as simple as browsing the projects to find the right one (or more!) for you. Once we review your submission, we will take care of all the paperwork for you. Once you’ve fully invested, we will update you along the way to keep you informed about your investments.
DiversyFund is a real estate crowdfunding online investment platform that connects accredited investors to vetted real estate investments. The platform provides simple browsing, investing, and managing of investments. Our team of dynamic real estate professionals is committed to providing you with the best investment opportunities. We have combined our extensive knowledge of real estate with our experience in asset management, consulting, investment banking and technology to revolutionize the real estate industry.
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