Why Real Estate Crowdfunding and Black Fix and Flip Real Estate Investors Are a Match Made in Heaven

designraAlternative Finance, Community Capital, Crowdfunding, Real Estate Crowdfunding3 Comments

Real Estate Investing

Introduction

I post into 15 Black real estate investor Facebook groups across the Midwest and this group has over 15K members of professional real estate investors. What are fix and flip real estate investors and how do they operate? Why is this model a great match for real estate crowdfunding? House flipping—buying distressed homes, rehabbing them quickly, and selling them for a profit—is one of the most reliable and rewarding ways to make a profit in the modern real estate market. Flipping is more popular than ever, and its recent rise has been fueled in part by the simultaneous rise of real estate crowdfunding. The two have such a symbiotic relationship that it sometimes feels as though real estate crowdfunding is designed specifically for flippers.

Real Estate Crowdfunding Expands the Investor Pool

The crowdfunding finance model expands the ability of these fix and flipper investors to pool community resources that will enable them to raise larger sums of capital for much larger groups of investors. The crowdfunding model will allow investors to aise up to $5 million to fund projects. Real estate crowdfunding expands the pool of potential real estate investors to both professionals and community members by allowing anyone over the age of 18 to invest as little as $100. The data points to the difficulty of Black people’s ability to obtain mortgages from banks and lending institutions that meet their needs turn to the crowd for help raising capital. Also, real estate crowdfunding can expedite the ability to raise capital this process can happen in a single day. 

Real Estate Syndication for Non-Accredited Investors  

What is realestatedication is a partnership between several investors. They combine their skills, resources, and capital to purchase and manage a property they otherwise couldn’t afford.The practice of syndication was popular in the 1980s before the internet went commercial. The idea behind syndication was that several real estate investors could pool their money into a syndicate, which would choose the properties these investors funded and earn a percentage of the returns for managing the investments.

Fractional Investing and Real Estate Crowdfunding  

Fractional investing has been around even longer. The advent of internet-based funding, however, made fractional investing more popular and available to the average investor. Today, fractional investing opportunities are available as debt-based instruments and equity-based investments allowing private investors from all walks of life an opportunity to buy a piece of a real estate deal and see returns on their investments based on the structure of the deal. Changes in securities laws in the last decade have allowed real estate crowdfunding and private lending platforms a legal means of making public offerings that just a few years ago couldn’t occur. That means real estate investments have opened up to a whole new class of investors.

Bigger and Better Investment Deals

Real estate crowdfunding has become a competitive industry. As the industry grows, and as more real estate developers adopt crowdfunding as a means of raising capital for their projects, the deals tend to get bigger. That’s good news for investors. Bigger deals mean more potential returns, but another side of that coin is that Real Estate Crowdfunding platforms hone their underwriting and risk assessment practices so that the deals that are funded are actually better investments overall.

Real Estate Crowdfunding Provides More Diversity 

As always, investors benefit if they don’t put all of their eggs in one basket. Instead of looking at one vehicle for your investments, you can protect against downturns in one category by keeping your portfolio diversified. In other words, if you’re heavily invested in stocks and bonds, branch out into real estate and commodities. Even within the broader investment categories, you can spread your investments around to protect your entire portfolio. If you are not currently investing in real estate through crowdfunding portals like Buy The Block, adding real estate crowdfunding to your investment portfolio will keep your assets spread out among different types of investments and protect your wealth.

Real Estate Crowdfunding Provides Lower Minimum Investments

Real estate crowdfunding benefits investors by allowing individual investors to put up less money for a shorter period of time. non-accredited investors can get into most deals with less than $1,000. Depending on the platform, you can get into a lot of deals for less than $1,00. And you can still spread your investments out among several deals on the same platform.These deals are also for a shorter period of time. Most real estate crowdfunding platforms provide investment opportunities for 12 months or less. These short-term investments allow investors to ride out volatility waves in other markets while maximizing returns on better investments.

Key Takeaway

Real Estate Crowdfunding has brought many of the investment benefits that wealthy investors and developers have had for decades that have allowed them to amass fortunes through real estate investing. Today non-accredited investors can enjoy the benefits of passive real estate investing with diversification across a Regulation Crowdfunding platform with high-level deal flow. Real Estate Crowdfunding offers low minimums that will allow the masses to invest in projects across the nation with other investors. Developers can take advantage of Real Estate Crowdfunding by using the platform to raise larger sums of capital and no more fix and flip one property at a time. If you want more information on Real Estate Crowdfunding and book your 10-minute FREE call with an experienced crowdfunding coach at Crowd-Max.com.

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