Real-estate crowdfunding is a form of raising funds that allow small real estate investors to fund big projects. Real estate crowdfunding is also referred to us real estate peer-to-peer lending or financing of real estate projects. The process of raising money is conducted via various viable options (Online/Wire transfer, cheques). One party (the borrower) joins a platform with the aim of getting funds to start or improve a real estate project. Another party (the investor/lender) joins a platform to invest capital in exchange for high returns on the investment.
If you are a real estate investor with some capital, you can grow your wealth passively through crowd funding. We have two types (Equity and Debt investing) of real estate crowd funding options for our investors.
Equity (Equity-based) Crowdfunding:
Equity investment provides high returns compared to debt investing. When you invest this way, you will receive returns based on the property’s rental income less crowdfunding platform fees. The pay-outs for this type are usually sent once the sale is open and the investors earn a share of the property’s appreciation value in case it is sold. The major risk associated with this type of investment is that investors have an equity stake in the property, which means they can lose money if the value of the asset decreases.
Debt (Lending-based) Crowdfunding:
Dept investment is the most common route for investors as it is more simple to invest. In this type of investment, you lend funds to the owner of the property. In turn, you will receive a fixed interest based on the owner’s mortgage loan and the amount that you have invested. Payments for loan investment are usually given quarterly or monthly. At property pay-out (which is usually a fixed date), you will receive your invested amount (principal).