30th July 2016
Crowdfunding is one of the latest method for raising funds by asking a large number of people each for a small amount of money. Until recently, doing large property transactions involved asking a few people for large sums of money.
With crowdfunding this gets changed, you just use the internet to communicate with thousands of potential investors. Through crowdfunding, investors can pool money together and buy shares of properties, rather than buying the entire property and dealing with the hassle of works, mortgages and tenants, but still end up with usual property returns. By investing through crowdfunding investors also reduce the burden of high interest rates of development mortgages. One of the benefits of crowdfunding is insider access to private transactions that were historically limited to the extent of one’s personal network. Another benefit is the transparency it brings with it.
The moment a new deal becomes available, investors have the chance to look over the finer details before committing to a final investment decision. Investors also have the flexibility to choose the amount they wish to invest compared to the large sums that they would had tied up for individual property deals. This flexibility would help them to diversify their property investment portfolio not just in multiple properties but also by using different crowdfunding platforms.