Why Real Estate Crowdfunding will Be Taking Over Kick Starter And Other Related Ventures
Kick Starter is a well known site which started online crowdfundingto start small projects into worldwide successes. While numerous projects have made it large through such sites, the fact remains that what investors want is a return on their capital. To this end start up sites weren’t much help with the most that people got were posters, action figures and prototypes of the devices, etc for which the projects were. While tech fans and geeks may not seem to mind, comparison to a recent development may have investors thinking otherwise.
This July, a 15 stake was sold of a hotel (Hard Rock Hotel) over to a group of 85 people. The amount exchanged was $1.5 million, nothing more than a clerical error in today’s real estate deals. However the point of interest was the way the deal took place, through crowd funding. Investment crowdfundingis a recent development, with the 2012 JOBS Act legalizing it for investors with certain requirements.
Real estate through crowdfundingstill leaves doubts. Looking at the figures, REITs had close to $670 billion in property throughout the US. How did that figure to the property holdings? Not more than a small fraction. Real estate investment ventures are expensive, very expensive. Crowdfundingon the other hand; generally generate thousands of dollars with excellent runs coming in at up to $10 million at most. However, despite these shortcomings crowdfundingis gaining pace. Numerous companies are looking to become what Kick Starter was to the crowd source funding phenomenon, the one to start it all.
A demo run of how the crowdfundinggig works has been explained as follows. Signing up for an account is followed by a 504 hour wait period after which deals are ‘unlocked’. Minimum investment options start at $20,000 and then onwards.
All in all, this seems to be gaining pace. In comparison to REITs, this option allows investors to play it safe and develop acumen for the field. Once done, they can place more capital accordingly. Compare this to REITs and similar companies where investments are spread over a large lot to minimize risk losses. Despite this safety net, the best real estate crowdfundingplatformallows investors to see the action up close and experience the ups and downs of a consolidated investment. Stop asking yourself “what is real estate crowdfunding?” and start acting today!
