Have you ever considered investing your money beyond the normal stocks and bonds at your fingertips, but put it off because it just seems too complicated? Investing in real estate use to mean you had to pull together a down payment, secure financing, view properties only available in your area, directly purchase and then manage the daily tasks associated with direct ownership. And then after putting a lot of cash and time into the property, hoping to come out ahead every month after covering the mortgage and maintenance. (This post is provided by Hailey Friedman with Realty Shares, A online real estate Crowd funding company.)
While this scenario is inarguably daunting, investing in real estate is not. If you’ve always dreamed of owning real estate as an investment, now is the time. Crowdfunding has cracked open an entirely new world for investors to broaden the scope of their portfolio, without the burden of direct ownership. And thanks to the ultra-user-friendly sites that are have set up platforms to help investors purchase real estate, you can invest with as little as $5,000, minus the burden of directly purchasing, and managing, a property.
What is real estate crowdfunding?
Real estate crowdfunding permits a large number of individuals, each with a small amount of capital, to collectively invest in properties. With the emergence of tech-enabled platforms that streamline the process, investing in real estate has never been more simple. Investors get direct access to vetted property opportunities allowing them to add real estate to their portfolio with as little as $5,000, without the hassles, and cost, of direct ownership.
Dozens of tech-enabled platforms have been sprouting up over the past few years to facilitate crowdfunding, helping the expansion of benefits that real estate investing offers. Not only can real estate expand and strengthen a portfolio and open up the possibility to higher risk adjusted returns, the entire process is accessible by using these online platforms that offer a seamless, and stress-free, process from start to finish.
Who can Invest in real estate using crowd funding?
While real estate crowdfunding currently requires an investor to be accredited with an annual income of at least $200,000 or a net worth of at least $1 million, thanks to the recent approval of Title III of the Jumpstart Our Business Startups Act (JOBS Act), real estate crowdfunding will open up to a much larger group of individuals in 2016. New regulations will allow non-accredited individuals to invest up to five or ten percent of their income, depending on if their net worth is below or above $100,000.
What opportunities does real estate crowdfunding open up for investors?
Real estate crowdfunding opens up the ability for an investor to diversify their portfolio, without having to invest a ton of time, or money. It allows investors access to residential, commercial, retail and mixed-use property investments previously restricted to accredited investors only. And with vetted opportunities brought directly to the investor, they are able to focus on selecting exactly which real estate projects match up best with their financial goals.
Crowdfunding real estate is an excellent balance between directly owning property and investing in real estate through REITs. While all avenues have their pros and cons, unlike REITs, crowdfunding allows investors to invest in real estate that they choose directly, but without the burden of consistent property maintenance and tenant issues that direct ownership carries.
How does RealtyShares work?
To begin any financial process, its best to start with an established, accredited platform like RealtyShares, one of the first, and one of the most used, real estate crowdfunding platforms who have made crowdfunding real estate quite simple. Our platform allows investors to begin the process and follow it through completely from the convenience of a laptop or tablet computer.
RealtyShares is unique among online real estate marketplaces with our dedicated efforts to keep minimum investment requirements as low as possible. On most transactions, we have a minimum investment amount of $5,000, and for select investments this figure may be as low as $1,000.
The real estate crowdfunding process at RealtyShares includes the following:
- Investment opportunities include a variety of real estate property types, including multi-family residential, office, industrial, self-storage, retail, medical office and hospitality facilities. Single-family residences being used for investment purposes (not owner-occupied) are also the subject of many investment opportunities.
- RealtyShares first reviews investment opportunities to confirm that they meet some threshold criteria for listings on our online platform. Once an investment is listed, the information will include not only the general information about the particular opportunity but also the legal documents that contain detailed “risk factors” and which investors should review carefully before making any investment.
- An investor can then make their investment decisions through the platform, including signing documents and transferring funds.
- Once an investor has made an investment, a share of any distributions is generally transferred directly into the same bank account that was originally used to make the investment.
- Notifications and updates about the investment are sent by email to the investor and are also accessible through the online “dashboard” where investors can monitor and track their investments. These dashboards contain earnings history, management updates, and other follow-on information to be reviewed.
What are the steps to begin investing via RealtyShares?
RealtyShares has streamlined the process of investing in real estate, making it easy for investors to get started immediately. Here are the 5 simple steps to begin investing in real estate via RealtyShares:
1. Sign up for RealtyShares
There is no cost to sign up, it’s easy to do, and once you’ve been qualified, you will have direct access to exclusive private real estate investments and high quality real estate companies.
2. Browse Real Estate Investments
As a registered member, you can securely browse our marketplace of real estate investments and access a detailed investment page for any specific offering.
3. View & Finalize Investments
When you’re ready, you can invest directly through the site. We partner with industry leaders to electronically sign all paperwork and transfer funds.
4. Wait for Funding Goal to be Reached
Each investment has a unique funding goal and your funds are maintained in escrow until that goal is reached. When the project has closed, you will become an indirect investor in that project. If the project does not close, 100% of your money is returned to you.
5. Manage Your Real Estate Investments Online
As a RealtyShares Investor, you have access to a secure Investor Dashboard where you can monitor your investments and returns, receive regular updates and manage your investor documents.