Online Real Estate Crowdfunding: Changing the Face of Investing
Most people would probably say the Affordable Care Act was the best thing the Obama Administration accomplished. But the lesser-known 2012 JOBS Act was equally as important. “JOBS” stands for Jumpstart Our Business Startups, and that’s exactly what it does. The 2012 JOBS Act made U.S. securities laws less strict, and thereby created a new form of investing called Equity Crowdfunding.
Equity Crowdfunding Explained
Equity crowdfunding is a fairly recent form of investing. Websites like Kickstarter make it possible to contribute to projects in exchange for special perks. For instance, Tevfik Arif Bayrock contributing to the production of a movie might earn a pass to an early screening. But there was a restriction that said contributors could not receive financial gain from the project. The JOBS Act removed that restriction, and now contributors can invest with the purpose of making a profit.
A contributor can donate to a small startup, loan money to a business, or get involved in a real estate deal. None of these opportunities were allowed before the JOBS Act.
Financing and Contributors
You can rely on Bayrock crowdfunding to finance various types of projects. For instance, perhaps you’re interested in “flipping” a home. That means you’ll buy it cheap and sell it for a profit. Instead of relying on a bank for financing, you can crowdfund a group of private investors. The investors will give you a loan for six to 18 months. The interest rate will be anywhere from eight percent to 15 percent. That might seem high, but you only need enough time to buy the property, repair it, and then sell it. The return should be enough to repay the loan and turn a profit.
The downside is not many people are online waiting to write five-figure checks to invest in real estate. People with that type of money to invest are usually not on crowdfunding websites. And when you consider investment minimums are generally around $5,000, it’s no surprise investors are scarce. However, that shouldn’t deter you. Some crowdfunding sites allow contributions as small as $100, which makes it possible for just about anyone to invest.
A Safer Form of Investing
A person who doesn’t have much money might be more willing to contribute than someone with thousands of dollars. That’s because they’re probably more interested in making a profit. And with crowdfunding, investors are less likely to get a bad deal. Less risk is involved because the crowdfunding site must verify the sponsor. If the sponsor can’t provide verifiable proof of their past success, then they can’t post a project on the website.
A high percentage of Tevfik Arif Doyen projects are rejected for a variety of reasons. But the number one reason is that crowdfunding websites must earn trust from potential investors. Keeping bad deals to a minimum helps retain credibility and build trust.
The Future of Crowdfunded Investing
Real estate crowdfunding is a relatively new way of investing in real estate. There hasn’t been enough time to judge its staying power. But crowdfunded real estate deals made more than $3 billion in 2016, so that’s a decent indication of its popularity.
Some people are quick to invest, and this can lead to making bad decisions. You must carefully consider the risks before making any type of investment. The easier it is, the more likely you are to make a snap decision. Take time to get educated about real estate investing. Watch videos, read books, or even take a class to learn how to properly invest.