Real Estate Crowdfunding: the democratization of real estate investment

Investing in real estate has always been one of the top choices to generate cash flows and wealth.

Investing in a tangible asset entails the possession of physical assets. Real estate is a more tangible type of investment than other options, which has historically made it a very popular choice for making a return on savings. It is further reinforced by how the real estate value tends to increase over time, potentially generating long-term gains from capital appreciation.

Why is Spain one of the countries where most people invest in real estate?

The reasons why real estate has traditionally been considered the leading investment, at least in our country, revolve around the following variables.

  • Profitability. The real estate market can be highly profitable. The demand for properties is usually directly proportional to the growth of the population and the economy, which can lead to an increase in the value of the properties considering that the new constructions are usually behind this demand. Furthermore, real estate can bring a regular and stable income over the time it is owned.
  • Diversification. Real estate investment constitutes an alternative to conform a diversified investment portfolio. Its model is different, providing a complementary product with other types of investments, traditional or alternative, such as shares and bonds, providing the investor to reduce the risk in its investment portfolio.
  • Control. Real estate investors have greater control over their investment since they can decide on the purchase, sale, improvement, and management of their property, with its corresponding impact on the value and income generated by the property.
  • Inflation. Real estate investment capitalizes on inflation. As the cost of living rises, property prices and rents can increase to keep up with inflation, generating additional profits for the investor.
  • Tax advantages. Real estate investors can deduct property-related costs, such as maintenance and mortgage interest, potentially minimizing their tax burden.

To sum up, investing in real estate allows you to opt for an easily profitable product and a piece that should be part of the puzzle of your investment portfolio to access greater control over the investment. Real estate investment benefits from inflation and offers you tax advantages. However, it is vital to consider that, like any investment, it also carries risks. For this reason, it is necessary to carefully assess the economic, political, and social factors that may affect the real estate market before making any investment decision.

The democratization of real estate investment via innovative formats

Traditional real estate investing often entails large sums of money and long periods before achieving a significant return. But what if there was a more accessible and faster way to invest in real estate? Real estate crowdfunding offers an alternative investment solution that democratizes the industry, permitting investment in real estate through smaller outlays.

Real estate crowdfunding is a new form of funding in which many people contribute small amounts to finance a real estate project. Instead of investing in an entire property, investors buy shares in a real estate project and share the benefits and risks with other investors.

The main advantages of investing in real estate crowdfunding are:

  1. Accessibility. Real estate crowdfunding allows investors to participate in real estate projects with relatively small amounts of money, which means that even people with small budgets can participate in real estate projects with relatively small amounts.
  2. Diversification. Real estate crowdfunding eases investors to diversify their real estate investment portfolio by simultaneously investing in several projects, reducing risk and increasing returns.
  3. Return rate. Real estate crowdfunding can be very profitable. Investors could earn annual returns of close to 20%, exceeding many other investment forms.
  4. Control. Real estate crowdfunding investors select the projects they wish to invest in and control their investment. It is vital to have access to real estate crowdfunding platforms that provide detailed and accurate information about the projects to ensure an enlightened decision-making process.
  5. Liquidity. As opposed to traditional real estate investment, where investors often have to wait to sell their property, real estate crowdfunding allows for greater liquidity. Investors can sell their shares in a real estate project at any time.

Bottom line, real estate crowdfunding is an accessible, cost-effective, and diversified way to invest in real estate. It also offers investors control of their investments and access to greater liquidity. If you are interested in investing in real estate but don’t have the capital or knowledge to do it on your own, real estate crowdfunding may be the best option for you.

At Fellow Funders, you will find an equity crowdfunding platform with selected projects to form an investment portfolio diversified by type, stage, and sector. Our experts will provide rigorous and detailed documentation for each round so you can make the best alternative investment decisions.

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