Real estate crowdfunding has exploded in popularity over the past year with both rookies and seasoned investors looking to get their foot in the door. Although it is a relatively new concept, real estate crowdfunding is revolutionising the real estate market. It offers a completely new way of doing things in an industry in need of disruption and innovation. With the global real estate crowdfunding market set to grow to $114 billion by 2021, investors cannot afford to ignore the hype around this opportunity.
CrowdProp, South Africa’s first-ever property crowdfunding platform, cuts through the noise and outlines 10 reasons why real estate crowdfunding is such a strong investment option for all South African investors:
1.It breaks down the barriers to property investing
Crowdfunding has opened the real estate sector to a new and largely untapped audience. Previously, property investments were available only to individuals of a high net worth, as these types of investments required large amounts of capital. Real estate crowdfunding enables the average individual to access real estate investments in a new and unique way.
By investing small amounts in property as an asset class, investors can spread property exposure among various properties. This allows them to gain exposure to various properties in different areas and ensures their money isn’t tied up in only one property, thereby reducing their risk.
3.Invest for as little as R10 000
Real estate crowdfunding has made property investing more accessible to everyone by reducing the minimum investment amount. Investors can, for the first time, collectively participate in property investments with a low capital output, enabling them to earn a passive source of income and realise their financial goals. Through CrowdProp, investors can enter the property sector and own actual property from as little as R10 000.
4.Own a property minus the stress
One of the biggest advantages of real estate crowdfunding is not having to handle the stress associated with owning traditional real estate. Owning and operating any property is a detailed process and can take up significant time, energy and resources. CrowdProp offers a complete management solution from finding tenants to collecting rentals and attending to maintenance. This means investors will not have the stress of dealing with the day-to-day management of the property.
5. Low fees
Most property funds are characterised by high overheads and excessive fees that diminish investor returns. Real estate crowdfunding platforms have significantly lower fees in comparison which makes it an attractive choice for smart investors.
6.Invest beyond borders
Investors can create a globally diversified investment portfolio as they have access to global property investment opportunities generally beyond their reach. This allows them to earn in foreign currency and hedge against the volatility of the rand.
Investors can access information, invest, and manage their investments on a user-friendly platform 24 hours a day, from anywhere with internet access. This creates a seamless and convenient investment experience that allows anyone to invest in a few simple clicks.
While all types of investments come with some form of risk, real estate crowdfunding offers a much higher level of transparency. Each property is carefully screened against our stringent due diligence and financial models as well as vetted by independent experts before it is listed as a potential investment on the CrowdProp platform. Investors are also allowed to vote on certain key decisions regarding their property such as whether it should be sold etc. in order to give them control over their investment.
Real estate crowdfunding delivers steady cash flow with rental dividends distributed to investors on either a monthly, quarterly, or annual basis. Property is a dual yielding asset which means that you can benefit from rental income as well as capital appreciation over time.
Investors have greater flexibility due to not being restricted to a single property or project. Rather, they can spread smaller investment amounts across a wide variety of projects, thus helping to mitigate risk.
Crowdfunding the future of property
As we become increasingly reliant on technology and a sharing economy (Think Uber and Airbnb), buying a property outright is no longer your only option for investing. Therefore, there is no question real estate crowdfunding will continue to not only rise in popularity, but redefine the way real estate assets are bought, managed, and sold.