With crowdfunding sites transforming the way people raise money, it is a great tool for fundraising, as each donation doesn’t need to be very large to accomplish the goal. The number of people that donate are what makes all the difference. This new method has revolutionized how startups, musicians, artists and directors earn funding for their projects. However, it has also hugely impacted the world of real estate investment.
What is the crowdfunding real estate definition?
Crowdfunding real estate is a way to gain many investors without requiring high dollar amounts from each one. The basic idea behind crowdfunding is that it’s easy to get a lot of people to invest small amounts. When they all work together, a campaign can quickly meet its goal. This method, when applied to real estate development, allows developers to reach new investors that they could never have reached otherwise and vice versa. Now, real estate investment isn’t an exclusive business venture– and you don’t have to be a billionaire to start playing the game.
The old way to invest in real estate
Before crowdfunding real estate was an option, investing in real estate depended mostly on business connections. It was all about who you know and how much money you had. Under the Securities Act of 1933, private securities could not publicly solicit investments. Plus, the minimum threshold to invest in these deals was usually in the six-figure range. The high amount needed to invest coupled with a ban on investment solicitation made it impossible for any average investors to earn a spot in the real estate market. For developers, the pool of investors was very restricted which made earning capital difficult.
The future of real estate investment
When the Jumpstart Our Business Startups Act of 2012 was passed everything changed. Now, developers can directly market to accredited investors. Real estate developers have adopted the crowdfunding model to find new investors who are eager to enter the market. Potential investors can literally choose where to invest their money from their smartphones and tablets. Plus, they don’t have to fork up $100,000 or more. While the SEC is still reviewing a few materials in this process, the hope is that this method of investing in real estate development will continue to thrive. Even more so, that it will provide some great alternatives for investors in the future.
How can crowdfunding real estate affect you?
However, the great news is that you can now gain access to the real estate market without having exclusive business connections. Additionally, by participating in crowdfunded real estate ventures, investors now have a voice in the development process and can be more involved than ever. With so many more options available and all at different price points, investors can now be choosey about where they want to invest their money.
Why work with DiversyFund?
DiversyFund is a real estate crowdfunding investment platform that connects accredited investors to borrowers. The platform provides the ease of browsing, investing, and managing investments online, anywhere, anytime. DiversyFund is your gateway to exclusive real estate investing. We simplify the process of crowdfunded real estate investments. Our team of dynamic and committed real estate professionals provide 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. Thus, making the investment process simple and accessible for you.