Everyone knows there can be big rewards in real estate investing. But, for many, the risk was always too high. No matter which way you went – commercial or residential – there were so many variables that even the savviest investor could lose his shirt.
But crowdfunding is changing that. A startup called RealtyShares recently launched a way for investors to put small amounts of cash into larger deals. In this way, you could spread the risk out among many different projects and increase your chances of success. Better still, investors can get a piece of major projects with relatively little cash up front. For example: for projects ranging from $100,000 to well over tens of millions, the buy-in could be as little as $5,000.
This method allows beginner investors to get a piece of the larger action and veteran investors to spread the risk around. Instead of putting fifty grand into a single make or break project, investors can put the same money into ten projects. Even if half of those projects don’t turn a profit, you are still likely to cash in.
Elie Hirschfeld, a real estate developer noted, “This idea works great for developers too. Instead of going to one well-heeled investor for the cash to get a project going, some will turn to crowdfunding getting cash faster and easier.”
In 2015 alone RealtyShares built $300 million in real estate property value through 200 different projects in 17 states. According to company spokesmen, investors have been getting between 8 and 29 percent return on their investment, depending on the project. Try getting that in a mutual fund! This is just one way crowdfunding has revolutionized business and investing. What are some ways you think crowdfunding will change the world in 2016?
Juda Engelmayer's Blog 