Crowdfunding for your Austin Real Estate Investment
Compared to the other forms of investment in your typical market, property comes at a cost. You may find yourself parting with hundreds of thousands of dollars just to purchase an investment property. This may come as a challenge to many given that you have other financial obligations to meet.
A verified option for you is crowdfunding.
What is Crowdfunding?
Crowdfunding refers to the process of pooling resources together for the purpose of acquiring or investing in a venture. In the current jurisdiction, Crowdfunding is mostly conducted online where investors can pursue potential investment options and choose the most appropriate for them.
The form of investment options can vary since real estate offers several sub-markets to invest in. Depending on the local market, a commercial strip mall or a condominium complex in the downtown area could be an ideal option. The common real estate investment options with Crowdfunding platforms include apartments, retail spaces, offices, hotels, and malls.
The benefits of Crowdfunding
- Reduced risk. With many investors sharing the initial cost of acquisition, the risk borne by each investor reduces drastically.
- A track record of sizeable returns. Over the years, Crowdfunding has returned larger dividends than your typical investment option. They have even outperformed REITs, and real estate investment trusts. It goes without saying that the returns also depend on the experience of the Crowdfunding platform or entity.
- Unique investment options. With pooled resources, you are now able to quality and invest in unique projects that were you alone you had no chance of participating in.
The disadvantages of Crowdfunding
- Every investor has a share in the decision-making of the invested asset. It makes it challenging to make quick decisions or even sell off the asset and take advantage of certain market situations.
- Taxation on dividends. The IRS will demand that you pay taxes on dividends received from your Crowdfunding investment.
- Qualifications of the Crowdfunding entity. The experience and expertise of the entity can either make or break the entity.
A few pointers
It is not hard to find the allure of using Crowdfunding platforms to invest in real estate. However, before you make your initial contributions, you will need a few pointers to help you along the way. This will help you map out:
- Source several platforms and compare their fee structures, services, and investment opportunities
- Consider the amount of return that you should expect from your investment. Compare to other options in the market
- Have a look at your books and analyze how much cash you are willing to invest in
- Inquire on how long you can expect your money (minimum) to be tied up in the investment before you can withdraw
- Read the reviews of previous investors on the quality of service, returns, and the expertise of the team
Do you need more advice on how to go about investing in Austin real estate? You need to rely on an expert who is reliable, qualified, and experienced. Get in touch with the property experts from Chris Price Realty today.