What is crowdfunding?
If you’re tired of low returns from certificates of deposit, savings plan, and other stock investments, check out crowdfunding for double-digit returns. Crowdfunding is gaining popularity as an investment strategy for many investors. It is a unique process of raising capital through family, friends, potential clients and individual investors looking for different investment venues. To promote crowdfunding, advertising is a focused approach that uses social media, real estate investor forums, and associated networks.
What is the right platform for me?
My preference is crowdfunding with real estate investments that I will discuss here. There are many different strategies and models for crowdfunding platforms, so you want to make sure that the platform you choose is right for you. Ask the question: Am I comfortable with the amount I will invest? Do we share the same values? Do you agree with their investment strategies such as flipping houses or buying and holding for long-term passive income? The amount required to invest will vary from place to place, so shop until you find one that works for your investment portfolio.
Do your homework
Do your homework before investing. Historical performance is a good indicator of future performance. Get to know the management team and see what they’re doing on social media. How transparent they are and how willing they are to talk to you and answer your questions, including tough ones. Those who are more willing to share beliefs, management, and goals tend to do better for themselves and their clients in the long run. Also reach out to other investors to get their input and endorsement.
I’ve seen many attractive returns advertised knowing that they were more accurate pricing to get you to contact them. Do your homework to see if the numbers are realistic. Ask how much detail is available about the work? How do I access my investment and returns after committing? How and when are investment returns distributed? What type of reports (personal and legal) are submitted to the investor? Make sure you are comfortable with the management team and the security of your investment before taking this first step.
Example of crowdfunding
Personally, I invest with Holdfolio. Their buy and own platform consists of 10 homes for rent under one portfolio. These homes are purchased, rebuilt for rental use and then leased out. 60% of the ownership is provided to investors (the crowd) with a minimum investment of $10,000. 40% of the ownership is owned by the Holdfolio management team. The reported returns when I invested over a year ago were between 10%-14% and I am currently making 11% returns annually. With each new portfolio, 10 additional homes are offered to investors with an average crowdfunding amount of $320,000 that usually gets filled within 4 to 5 days. Holdfolio just finished Portfolio 10 and will launch Portfolio 11 soon. This is just one example of many crowdfunding platforms.
Real estate crowdfunding is rapidly becoming more and more popular today as investors are turning away from stocks to look for greater returns in other markets. Make sure you do your homework and narrow your search to the top three. If this is your first time, once you start your choice with a lower amount so your comfort factor will allow you to do more.