Real estate continues to be understood as one of the highest-quality markets to invest in. However, many experience problems when trying to start investing in real estate. This is due to the investments often requiring a large amount of starting capital. For this reason, many perceive real estate investing as the domain of the hyper-wealthy. As very few people can invest in an extra house or two. Let alone thinking about a piece of real estate such as, an apartment building.
In addition to being incredibly expensive, real estate investment in America has also historically required a number of private connections. In his article for Forbes Magazine, Nav Athwal writes, “Under the Securities Act of 1933, private securities investments (including securities of real estate companies) could not be marketed publicly. This means that access to private deals was limited to investors who were able to seek them out through connections in their personal network.” However, in the last decade, many of these legal precedents shifted. With this, more accessible platforms for investing opened up.
Crowdfunding Platforms Make Real Estate Accessible
Perhaps the most important new development in real estate investment is the proliferation of crowdfunding platforms. By allowing investors to place their funds in a variety of properties, crowdfunding platforms made real estate investing simple for ordinary people.
Before, real estate often required hundreds of thousands of dollars – and all of that money went into the same investment. Even if an ordinary investor can afford to invest in property, their investment still remains highly risky. If their building doesn’t turn a profit, the entire investment process goes bust. Real estate crowdfunding platforms, however, are remarkable as they require so much less of an initial investment. Even more so, they are innovative as they allow even wealthier investors to diversify their portfolios.
Real estate crowdfunding platforms allow many different investors to collaborate on the purchase of properties. If you enter a real estate crowdfunding investment with $10,000, you will be able to distribute that money across different properties and markets. This means that you won’t be as beholden to particular boom-bust cycles as those forced to invest in individual properties.
Investing in Real Estate Crowdfunding Platforms
This is why real estate crowdfunding platforms are useful for all real estate investors. It’s not just for those with less money at first. Many argue that the entire market has changed for the good. Even investors who may otherwise have been able to invest in a moderately diverse real estate portfolio can now invest their money even more widely, if they want to. As Athwal reports, this increases transparency across the board: “Previously, investors might go into a deal knowing very little about the property in question…Crowdfunding platforms, on the other hand, generally operate with a goal of offering investors as much detail about an investment as possible.”
In short, real estate crowdfunding platforms have opened up the world of real estate investment to a whole new group of investors. And, in so doing, changed the entire real estate market. If you’re curious, why not start today with DiversyFund? Making an account is quick and easy, and we’ll help you through every step of the crowdfunding investment process.