Gone are the days when crowdfunding was relegated to Kickstarter and GoFundMe campaigns that financed your friend’s startup, a neighbor’s medical bills, or a “Veronica Mars” film. Here in Utah, crowdfunding makes sense because our social networks, online or otherwise, are huge but intimate (e.g., families, community members, collegiate networks); a little word of mouth goes a long way to collect a small amount of capital from many individuals. And now crowdfunding has become a legitimate way to invest in real estate. All it takes is a click (or a tap) to invest.
What is Crowdfunded Real Estate Investing?
In crowdfunded real estate investing, many small-time investors pool their money to buy single-family homes, multi-family units, or commercial buildings across the country. For instance, if an experienced real estate investor sees an opportunity to flip an apartment building but doesn’t have the capital to do so, she can raise some of the funds from investors like you. This is accomplished via online platforms such as RealtyMogul and Fundrise. Some platforms require a sum as low as $500 to get started, while others ask that you be an accredited investor (i.e., have a net worth of at least $1 million or an annual income of $200,000) with a minimum $10,000 investment. The majority of single-asset crowdfunded deals are available only to accredited investors. (Learn how to become an accredited investor here.)
Is It for You?
Investing in real estate has generally been stable, historically speaking, and crowdfunded real estate investing is a convenient way to get in on the ground floor. It’s also great for diversifying your real estate holdings (hopefully you already have a stake in Utah’s booming market) and could allow you to reap returns exceeding 10 percent annually. But keep in mind that there’s still risk, and crowdfunding is still a relatively new concept. Each platform offers a variety of investment options to suit your risk tolerance, real estate preferences, and time commitment.
To learn more about crowdfunded real estate investing, start here:
Acquire and achieve,