Invest for the long termīefore jumping in, it’s important to know that your money may be tied upįor a while. Increased safety of diversification because of the way REITs invest. Units or even multiple properties and may even own some loans. Unknowns, spreading your money out among many assets is safer.Ĭrowdfunded REITs don’t invest in a single unit. In many cases, this strategy works out fine. With traditional real estate investing, most investors start with one Alternatively, you can take the cash as you go. You can reinvest your dividends in the early years to enjoy larger dividend payments in the future. REITs have a long history of healthy and reliable payments.ĭepending on which platform you use and which package you choose, dividends may be paid monthly or quarterly. Strong dividends attract investors who want to build passive income. If the stock market takes a tumble, that part of your savings may be sheltered from the fallout. For example, you might commit 20% to 30% of your investment money to crowdfunded REITs. Think of real estate crowdfunding as a way to diversify instead of just buying stocks and funds. To be fair, these same risks also exist in traditional stock investing. source: īoth principal and future dividends may face risks in a market downturn. However, as with most investments, there are no guarantees.
Higher returns than other investmentsįundrise, the largest real estate crowdfunding platform, boasts annualized returns of over 12% in recent years. Expect some annualįees to pay for these services if you own an equity deal, but these are usuallyĪ small percentage. You get the benefits of owning real estate without the worries ofįinding deals, finding tenants, or fixing leaky faucets. These may include physical buildings as well as loans. The pooled investment may then buy a portfolio of diversified real estate projects. Investment real estate crowdfunding platforms pool your money with money from other investors.
You can’t buy much real estate for $500 or $1,000 on your own. Reinvesting your dividends or taking your earnings as cash. Dividends, however,Ĭan produce passive income almost immediately. The share price is best viewed as a long-term gain. As the assets owned by the REIT go up in value, share prices also rise. When you buy shares in the REIT, you earn dividends and may also see capital appreciation over time. Many platforms use REITs to make investments accessible to nearly everyone. It isn’t uncommon to find you’re invested in a mix of both if you choose a REIT. Some investments may target real estate purchases (equity) while others may target real estate debt financing. Real estate crowdfunding platforms use investor money in several ways. Regulation A+ allows the latter which opens the private market for smaller investors but limits the pooled investment to $50 million. Real estate crowdfunding platforms use 506(c) qualified investments paired with private real estate investment trusts (REITs) to bring passive real estate income to a broad spectrum of investors. However, Rule 506(c) also restricts some investments to accredited investors based on income or net worth. Rule 506(c), a new rule of Regulation D, now allows companies to advertise private investments. Regulation D governs how real estate fundraising can be used and who can take part. In 2012, the Jumpstart Our Business Startups Act, also known as the JOBS Act, loosened rules for business fundraising. Instead, it’s an investment that can pay dividends and produce long-term growth of capital. But real estate crowdfunding isn’t a donation. Real estate crowdfunding platforms work much like well-known consumer websites such as GoFundMe.īoth types of platforms raise money from a large pool of people. Real estate crowdfunding uses small investments from many people to buy real estate or fund development.
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