About a year ago Home Qualified did a story about crowdfunding for Real Estate. This is the pooling of funds by a group of investors into a real estate project. Investors earn money first through rental income and then ultimately when the property sells. According to Forbes Magazine, the trend is here to stay. “By 2025, the crowdfunding industry is anticipated to be valued at more than $300 billion. Consequently, online real estate marketplaces are primed to capitalize on that explosive growth.”
After our research we decided to invest in a fund to study the results. One year later we have earned a 9.4% return. As a comparison the Dow Jones average return for 2018 at this moment is 2.4%. Overall as of now it looks like a solid investment for this year. So, let’s answer some basic questions on what crowdfunding is and how to get involved.
- Where does my investment go? Crowdfunds intend to invest in a diversified pool of commercial or residential properties.
- What is the cost? There tends to be an average of a 2% management fee yearly for these funds.
- Can I get my money out? You can get your money out, but with some restrictions. Most funds will have a definitive period you have to stay in for and if you need to take out sooner there will be a penalty.
- What are the risks? Like any other investment you run the risk of real estate going down and your investment with it
- What is the minimum investment? Most funds have a minimum of between $5,000 and $10,000, but some are as low as $1,000.
If you want any more info on crowdfunds for real estate or to get help getting into one of your own, reach out to us and we would be happy to help!