Wednesday, 19 Jun 2019

Purchase investment properties on a budget using crowdfunding

Crowdfunding is the practice where people put in small amounts of money to collect a large amount for a cause. It is typically done via the internet. It is also a form of alternate financing and crowdsourcing. Billions of dollars have been raised through crowdfunding. Though there are other ways too, crowdfunding is typically internet- based. Crowdfunding happens through three parties- the ones running the campaign, the ones providing a platform and arranging the whole thing and the donors- the people who will be putting in the money.

A very important role is played by the friends and family of the people who create the campaign. They share, micro manage and create support groups for the people who have created the campaign. They give the campaign the exposure it needs. Hence, it is very important for people to keep their friends and family in the loop. They are the ones who keep the entire campaign going. It is them and the exposure that they give that ensures the success of the campaign. Even though crowdfunding gained popularity from the mainstream art and music, it has proven to be equally useful for other purposes.

Crowdfunding in India has a long history with several causes including, books, military purposes and others. All kinds of people have used crowdfunding to collect their funds. Crowdfunding has its roots in India too. Crowdfunding in India has been a practice for quite some time now. Fundraisers in India have existed for several decades now, but conducting one’s campaign through the internet increases the legitimacy of the campaign. Having raised billions of dollars for crowdfunding, Millennials and Fundraisers in India rely on crowdfunding big time for their needs being met. Crowdfunding has become an important aspect of life for a lot of people. These days there are several crowdfunding platforms in India. Crowdfunding in India has established itself successfully.

Investing in real estate is a strategic way to inject some diversity in our portfolio while creating a long-term source of income. Historically, taking part in a private real estate deal meant having the right connections but real estate crowdfunding has opened up a new path for investors. To help understand how it works, this article will deal with the fundamentals of real estate crowdfunding.

Real estate crowdfunding deals with putting in multiple funds from various people in a real estate project. This kind of crowdfunding is not similar to rewards based, venture or loan crowdfunding. With regards to how investments are made, the kind of potential returns and level of risk involved is also different.  This helps find various investors who can be a support later for business.

There are two basic ways to invest that will be discussed in this article. This article will look at the two ways to invest in real estate. The first is, equity investment. Investors can make equity investments in commercial or residential properties.  Instead of money, properties are at stake here. Returns are also different in this case; it can be in the form of rental income generated by the property. The payments are usually made on a quarterly basis.

Debt investments are the second form of investments here. When one is in debt they invest in mortgage loan which is tagged in a particular property. These mortgages need to be paid timely. These are repaid with an interest, a part of which is paid to each investor who have participated in the deal.  Unlike equity investments, these payments are paid on a monthly or quarterly basis.

These are the two ways in which you can crowdfund in real estate.