The advantages of investing in real estate crowdfunding

Vicentiu Vlad

September 15, 2022

Image of article The advantages of investing in real estate crowdfunding

Thinking about a new investment? Maybe you should consider real estate crowdfunding – a new way to diversify your financial portfolio, easier, faster and more accessible. Through crowdfunding, you can pool your money online, alongside other business partners or friends, and invest in properties together.

If you want to learn more about real estate crowdfunding and what are the advantages of this type of investment, here are the answers you need!

What exactly is real estate crowdfunding and how does it work?

Many people are seeking to accumulate or grow their wealth through buying an investment property. But acquiring real estate is not something that you can do in a few days, prospective property owners need a large amount of capital or to qualify for a bank loan. Moreover, most of the investors have to make a large up-front down payment, to finance routine expenses in the form of regular ongoing bills. And another thing added on the list is the fact that the owners must also regularly upkeep and maintain any investment property holdings, pay for maintenance and utilities, and pay annual property taxes on these assets.

So here comes the solution - real estate crowdfunding - where investors pool their money using online financial technology (fintech) or crowdfunding sites to fund real estate investments, with an eye toward making an eventual profit.

With real estate crowdfunding, everything becomes easier. With a few hundred euro you can start investing in real estate, together with your friends, business partners, or other family members. Where is your money going? The payment is going to financial vehicles, which serve as holding companies that own and operate various real estate investments. As an investor on crowdfunding platforms you can choose from a variety of properties across all asset classes, both residential and commercial.

What are the advantages of real estate crowdfunding?

Real estate crowdfunding has its advantages and disadvantages, like any form of real estate investment. So, before committing funds to a crowdfunded real estate project, it’s important to consider all your options and to take into consideration the following advantages:

Exclusive market

On the crowdfunding platforms you can have access to unique real estate projects and opportunities, and you can find a more exclusive private market, with property investments that may otherwise be unavailable to general audiences.

Small investment size

Do you want to start your investment in real estate with as little as €100? Now you can do it! Real estate crowdfunding provides you with the opportunity to become a real estate investor due to the small entry ticket. So, you no longer need to have thousands of euro in your account to start investing in real estate. Now you can start your journey into real estate investing, with a small amount, just to “test the water”.

Diversify your portfolio

As you may know, diversification is a very important factor that can impact your real estate investments. Multiple areas of the real estate market can perform very differently from one another. So that’s why you have to take in consideration the real estate crowdfunding that is offering the opportunity to diversify your investment portfolio very easily, picking different properties, located in different areas, or even different asset classes.

If you put all your money (let’s say €100,000) into one real estate property, and that investment failed entirely, you would lose €100,000. But if you had invested that amount across say five investments, and one failed, you would only lose €20,000.

But, besides all these advantages, you have to take in consideration the weak points too. If you want to have full control over your investments, real estate crowdfunding may not be for you. When you make a real estate investment via crowdfunding, the property will be managed by someone else entirely. However, more traditional forms of investment provide investors with the ability to manage the project. If you have managed real estate before and you believe you can keep doing this, maybe a traditional form of investment will allow you to have more control over the property, which can typically make it easier to get the returns you are looking for.

If you want to start investing in real estate through crowdfunding, you will first need to select a crowdfunding platform to join, and one option could be One principal requirement that you need to consider is the minimum investment amount required by the crowdfunding platforms, but also the type of properties you want to invest in. While some platforms come with a minimum investment amount of only €100, others require minimum investments of €100,000.

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STOCKESTATE CROWDFUNDING SRL is licensed under the number PJR28FSFPR/400002, since 29.08.2023. Find us in the register of crowdfunding service providers of the European Securities and Market Authority (ESMA).


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