What You Should Know Before Becoming a Crowd Funding Investor

Posted by macrocrowd on March 25th, 2015

Crowd funding investment risks and benefits

Whereas crowdfunding in real estate offers a slightly better risk cushion as compared to other real estate investment platforms, there is always risk of financial loss.
Crowd funded property finance is normally done on intensely researched properties whose risk-return profiles have been vetted for the best outcome for investors. Nonetheless when there are market changes on a negative trend, you could still lose your money.

Though real estate investments face some level of risk, you can protect yourself further by carefully selecting a leading real estate crowdfunding firm that has clear regulations on how you can get out of an investment that is not comfortable for you.

Online transactions

The fact that property finance in USA can now be done through online crowdfunding companies means that you can invest beyond the physical boundaries of your location.
The best real estate crowdfunding companies enable you to sign up, pay, and process all legal processes of membership all on the Internet.
Once your membership has been approved and your initial investment has been cleared, you can view investment properties anywhere in the world and where your crowdfunding firm is able to invest on your behalf.

Most online crowdfunding platforms also place importance in keeping investors regularly informed on their investments via emails and dash board updates ensuring that you never miss an update.
Beware of investment defaulting

The downside to online crowdfunding is the existence of scams alongside genuine investment companies.
It remains your task to conduct due dilligence on your preferred crowdfunding firm by looking at the track record of investments and the returns paid on them, consulting with a firms existing members, and reviewing the management of the crowdfunding real estate firm.

Further still, you must ensure that your choice of real estate crowdfunding firm operates on approval by a respective governing body for real estate investments in your location.
Equity versus debt investments

Crowdfunding property finance gives investors two options on where to put their money.

If you are interested in ownership of the assets you invest in, your ideal plan should be equity investing. In this plan you will be liable to earn from rents charged on your property and from profits made once the properties are sold.

You can also earn from high interest rates if you choose the option of debt investments. These are offered in the same way as mortgages and you will be entitled to part of the monthly interest payments.

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