Given the recent interest in crowdfunding, it should come as no surprise to learn that it has become more and more popular in the most unexpected of places. For example, crowdfunding has become a popular choice for investors as well as real estate developers, with DealIndex predicting that it could have brought in more than $2 billion in 2015.
In part, this is because crowdfunding benefits real estate investors. First, it enables them to invest in properties even when they have limited resources, thus opening up new paths to financial success. Second, it enables them to choose what properties they want to invest in, thus empowering them with increased choice when it comes to their wealth. Finally, it opens up a whole new world of investments, thus opening up boundless possibilities.4 Crowdfunding Real Estate Trends For 2016 Click To Tweet
However, it is important to remember that investment is reliant on the cooperation of both the investors and the entities being invested in, meaning that the success of crowdfunding real estate can be attributed to the benefits to the developers as well. For example, crowdfunding means that developers can access more capital from more investors than otherwise possible, which should come as welcome news for perpetually resource-starved companies. Better still, crowdfunding means that developers can get their capital faster than borrowing from banks and other financial institutions, making it that much easier for them to pour funding into their projects as needed to ensure their success.
Regardless, the existence of these benefits for both investors and developers means that crowdfunding real estate promises to become more and more popular for the foreseeable future. In turn, this means that interested individuals need to pay more and more attention to the latest happenings in crowdfunding if they want to maximize the rate of return on their portfolios.
4 Crowdfunding Real Estate Trends For 2016
(i) It is a recent concept, but it is beginning to mature. As a result, investors can expect to see the consolidation of crowdfunding platforms as bigger and better competitors begin to absorb their less successful counterparts. While this will result in some chaos and confusion in the short rate, said individuals can also expect better security and better services because more mature crowdfunding platforms mean more resources as well as more expertise and experience.
(ii) As this particular field of crowdfunding matures, it is probable that debt-based investments will become more and more popular than equity-based investments. In main, this is because debt-based investment provide better rates of return, albeit at higher risks. However, it also helps that the maturation of crowdfunding platforms will boost investors’ confidence in potential investments. It is possible that some crowdfunding platforms will even begin specializing in debt-based investments as opposed to equity-based investments.
(iii) At the same time, investors can expect to see a bigger and bigger range of investments being made available through crowdfunding platforms for real estate. After all, as this particular field of crowdfunding matures, it can expect to see more and more investors looking in, driven by their sense of curiosity if nothing else. In response, it is likely that developers will begin offering more and more diverse investments as a way of attracting more and more diverse investors, thus increasing their potential funding.
(iv) The Internet has eroded geographical boundaries of all sorts, so it should come as no surprise to learn that it is expected to erode geographical boundaries when it comes to crowdfunding for real estate as well. Expect more and more crowdfunding platforms to support investing in other countries, thus opening up more investing possibilities for investors as well as more funding for developers. Better still, this has the potential to improve the long-term health of the field since afflictions in a single regional market will have a much harder time shaking confidence in the whole.