A new way to invest in Real Estate
Real estate crowdfunding has changed the landscape of real estate investing in recent years. Today you can make money with real estate crowdfunding online and i’m going to show you a place where you can even get started earning a return on your money as a non accredited investor with a minimal investment of just $5 US dollars.
I will tell you more about that in the next minute or two. First let’s get an understanding of real estate crowdfunding.
What is Real Estate Crowdfunding?
In the past the best way to make money with real estate was to buy and hold property whether you held that property to use as a rental property, or you held it in expectation of an increase in property values.. You could use this method equally if you wanted to invest in commercial property, or you wanted to invest in residential property.
This meant that the investor had to have a lot of money themselves to be able to seal the deal. Or they had to have a partner or two to put the funds together, or they had to be in good standing with their financial institutions in order to get large sums of money to borrow from a mortgaging institution.
Now fast forward to today and we have the advent of real estate crowdfunding but just what does this word crowdfunding mean?
In the simplest of terms it is a way to raise real estate investment capital for the purpose of funding a real estate development. That development can be in any of the areas that are comprised of residential real estate, commercial real estate, industrial real estate and lands whether they be developed or undeveloped land.
Crowdfunding is done primarily online and there are a number of platforms available for fundraisers to use for their efforts at this type of real estate prospecting. Using this method it is possible for such a prospecter to raise money from a lot of people for a project.
An investor that decides to invest via this new, innovative method does so with the understanding that they will be getting a return from their investment over a period of time.
Luckily for the small investors today who cannot find tens or hundreds of thousands of dollars to invest. There are crowdfunding platforms that will cater for us. As i mentioned earlier one can even get started with as little as $5.
These are the platforms that i’m sharing with you today. The ones we can use to test the waters in this business without spending a ton of money.
Our Crowdfunding Platforms
It’s been said that by the year 2025 or thereabouts the crowdsourcing industry is expected to be worth more than $300 billion dollars US. That’s a huge amount of money and it shows us that this industry is on the rise and expected to grow by leaps and bounds in the near future.
Right now is still a great time for any investor to get involved. Don’t worry if you are forced to start small because of financial constraints. Like any other business it has growth potential and you can start small and grow your holdings into millions over time as others have done.
Fundrise is a real estate investment company that is based online and offers the opportunity or persons to make money with real estate crowdfunding investments.
This company is one of those that enables investors with little money and no experience in real estate to actually get into the business of real estate with negligible risk.
This is smallest possible investment of all of the platforms i will mention today and it represents the best opportunity for a small non accredited, beginner investors to start.
Fundrise came into being in 2010 as the brainchild of brothers Ben and Dan Miller. However it was not officially launched until 2012 and it’s very first investment project had 175 investors who managed to invest $325,000.00.
I must tell you though that the minimum investment back then was only $100 US dollars. which is just one fifth of what the minimum is today.
Fundrise offers 3 core plans to investors. With these plans investors are allowed to invest in commercial real estate opportunities where the actual investment is done through a real estate investment trust. These 3 plans are.
1. The Supplemental Income Plan. This plan promises an attracive and consinstent income stream with quarterly dividends. At the moment this plan covers 62 real estate projects including projects for apartment development, home construction and commercial development.
2. The Balanced Investing Plan, which promises to build wealth through a mix of cash-flowing and growth oriented real estate. The plan currently has in it’s portfolio a total of 76 active projects.
3. The Fundrise Long Term Growth Plan. Here investors are promised superior overall returns from investments in primarily high potential growth real estate. This plan has a total of 57 such high potential projects currently active
Groundfloor is a crowdsourcing real estate platform that allows it’s investors to make an investment in providing capital for real estate entrepreneurs on a fractional basis. With Groundfloor both non-accredited and accredited investors are allowed to participate in the real estate crowd funding opportunities on the platform.
In February 2013 Groundfloor was co-founded by Brian Dally and Nick Bhargava. The company prefers to do business with individual investors instead of corporate entities. Therefore it has proved beneficial to small investors doing business flipping houses and investing in real estate
The first loan to be funded by investors registered with this company was a $40,000.00 loan to someone who wanted to renovate and sell a house in 2014. The project was a success as the house was renovated an sold for $159,000.00, with the lenders receiving their principal and agreed interest as expected.
The minimum investment that investors can make towards the projects that Groundfloor accepts is currently set at $100 US dollars and the company promises a return of over 10% return on your investment, with loan durations being usually between 6 to 12 months.
Realty Mogul is a real estate crowdfunding platform that used to only accept accredited investors, but recently a change has been made.
For the better i believe as now non accredited investors are also being accomodated via the newly created MOGULREIT plan. The plan has a minimum investment threshold of $2,500.00 and is open to both accredited and non-accredited investors alike. At the moment MogulREIT 1 boasts a return of 7.81% per year while MogulREIT 2 promises returns of 4.50% annually.
Realty Mogul was founded by Jililene Helman back in 2012 and has since been working to make the goal of investing in comercial real estate’ an achievable one for the common man.
Rich Uncles is a crowdsourcing real estate platform that provides an opportunity for it’s shareholders to earn an income monthly on the rents that it collects from the tenants who occupy its commercial properties.
This is the company that i mentioned earlier where you can start your crowdfunding investment with a minimum of just $5 US.
I believe that this platform affords potential real estate investors the chance to get in on the real estate game at the lowest cost because currently one can start investing with Rich Uncles with the lowest minimum i have seen anywhere. I don’t see any other platform that beats this minimum.
The company was founded in 2012 by Raymond Wirter and Harold Hofer with the express aim of making investment in commercial properties accessible to everyone, not just the wealthy.
I believe the company has achieved that goal quite nicely.
They have defined targets in regards to the types of property that they try to add to the portfolio. These include:
Student and Multi Family Housing to include high quality properties built to serve public and private universities
Quick Service Restaurants to include drive thru and dine in favorites like Starbucks, KFC and Applebees among others.
Convenience Stores including Circle K and 7 Eleven
Fitness Centers like 24 Hour Fitness, Planet Fitness and LA Fitness
PeerStreet was founded in 2013 by Brew Johnson and Brett Cosby for the purpose of creating a crowdfunding marketplace for the purpose of providing high quality loan investments.
As a PeerStreet investor you have the ability to choose the loan applications where you want to invest your money as investment capital via crowdfunding for annual returns of between 6% and 12%
At PeerStreet the focus is on residential debt that includes single family projects such as homes and storefronts, and the loans usually run for a duration of between 6 months and 36 months with a minimum investment of $1,000.00 to get started as an investor
My Personal Favorite
There you have it. The top 5 places for you to make money with real estate crowdfunding online. some of these i really like. With my favorite being the Rich Uncles platform. I like the fact that they invest in the little everyday properties that people are sure to use.
Places like restaurants, fitness centers, convenience stores. I also think it’s a very good thing that they also are into student housing for university students.
Hats off to Rich Uncles.
I have to say though that even Rich Uncles is not my ultimate fave in the way of real estate investment. My favorite is not even in the physical world. Instead it’s in the digital world. Digital real estate is my favorite. That means investing in websites.
Just like real estate in the physical world. The value of websites that you earn can and does appreciate over time. Especially if you put in the time and effort to build it, as you would build a physical property.
Take the case of airbnb.com as an example. The travel services business started by 2 college students back in 2008 virtually in their living room is now worth over 30 billion dollars.
Or Craigslist.org Started in 1995 and now worth over 1.5 billion dollars.
I’ve acquired one or two digital properties myself and i’m in the process of building businesses. Let’s see what they’re like in say 10 years from now.
There are a few great business models that you can build out with a website and proven ways to do all that with a little training and some perseverance and patience. If you care to you can take a look at what i consider to be the number 1 business opportunity for me to use to grow my digital property in cyberspace