Crowdfunding – What’s that?
Many young people fear they will never own a property no matter how hard they save towards a deposit because rising prices continually undermine their efforts. But if they save their money as part of a crowdfunded investment in property, it can grow in line with the market and eventually produce a deposit large enough for them to buy a home or a more secure retirement in later life.
Now the Boomers are coming up to retirement with all those financial worries. “Buying to let” is becoming a popular option for them but it comes at a cost they may not be prepared for – do they really want all the hassles that come with finding and buying a property? Once bought are they prepared for the tenant, trash and toilet problems 24/7?
Once more crowdfunding or crowd investing is looking a better option.
When investing with a crowd multiple house ownership is even possible whereas previously this was the domain of those with considerable funds. With crowdfunding many more people are able to say they own several properties – well a part share anyway.
- This is all possible because each crowdfunded project attracts a number of relatively small sums of money from private investors, from as little as $100 each. They usually do this via a website.
- The property is then bought below market price.
- If the property is to be flipped – after some form of improvement (painting, adding a garage or if a plot of land, getting subdivision permission) the property is then sold on at a profit.
- Otherwise for rental for a fixed term – typically two to five years.
- Either way the investors each have a proportionate share in the property, and a proportionate share in the profits.
- Each investor chooses which properties they wish to invest in and
- There is usually a procedure in place if you want/need to withdraw funds earlier than anticipated.
Frazer Fearnhead, one of the founders of the House Crowd UK which owns and manages 62 homes says they now buy an average of one property a week for their investors.
In an interview with The Observer he said: “We’ve seen a number of investors putting money in because they can’t get a foot on the property ladder otherwise.”
“Our investors are everyone from manual workers to investment bankers but very few are professional property investors. Many invest a little bit in every project we do, to build something up for retirement.”
“…. investing this way you control it, …. you control your own destiny.”
So with crowdfunding we can all become passive landlords or flippers simply by utilising the power of the crowd and a reputable crowdfunding company!
I’ve found the company for me to invest with a crowd, Going to Join me?
Go well till the next time
The Investor’s Guide To Real Estate Crowdfunding
* The House Crowd.htm
*Crowdfunded buy-to-let offers a new way on to the property ladder _ Business _ The Observer.htm