Whether you're looking to make money quickly or you're after more long-term, sustainable income-producing results, there are certainly ways you can make money via participating in a crowdfunded investment.
When decided on an investment, there are two considerations to make - whether the investment is for fast income or asset growth. Depending on your situation, you may be only interested in passive income or only interested in growth, but many investors would like to have at least a bit of both, and the good news is that different forms of property investment provide scope for each of these goals.
While many people think crowdfunding is something "different", it's not really - just a new format and distribution channel of methods of investing that have been common for a long time.
Diversification and Ownership
In crowd-based investing, the cash flows and asset returns are either:
Paid out to you in the form of a set of interest/dividend payments.
In this case, you get your money before anyone else including the property owners because you probably have a first lien on the property.
All cash flows from the asset are split between the owners of the property according to their ownership percentage, with the sponsor typically getting their money after investors get a portion of the cash flows. Your ownership typically has a debt like component where you as the investor are paid a certain percentage before the sponsor gets anything even though they own part of the asset. Unlike debt, if the asset doesn’t make any cash flow the sponsor is typically under no obligation to come out of pocket and pay you as the investors.
Invest in property through crowdfunding
Crowdfunding platforms offer a wide variety of investment options like peer to peer lending, equity, debt and green energy.
In a nutshell, Peer to Peer lending
is when borrowers take out loans from companies that pair potential borrowers with individual investors that are willing to lend them their own money.
Most of these loans are funded by their investors, and as the loan payment is made each month, a portion of the payment goes back to each of the different investors involved with the loan.
One of the largest peer-to-peer lenders in Australia are SocietyOne is the first P2P lender to launch in Australia back in August 2012. Investors provide this platform with an investment mandate to select individual loans for their portfolio.
Investing via a Special Purpose Vehicle (SPV)
This single-entity investment vehicle can simplify a startup’s cap table (a detailed spreadsheet that outlines all the stock owners of a company and the terms at which they have invested). Rather than listing each investor with the amount invested and supplying regular updates to every investor, the startup, in this case, would only need to add one entity to the cap table. By selling shares to a pool of investors, the startup may also be able to limit how active those investors can be in the company’s day-to-day operations.
Green Energy Investment
Crowdfunding has become increasingly important as a source of financing for renewable energy, and the platforms are starting to make a real difference. Trillion
Fund is one of an example of renewable crowdfunding.
Loans and investments are long-term and feature green energy investments which have previously been funded.
Invoice financing has been established for many years. Using crowdfunding principles, experienced investors and high net worth individuals are able to profit from this opportunity.
Through an auction, investors advance between 80 and 90 per cent of the money, for a fee. Working to a plan over the coming 45 days, the business repays investors, once the invoices have been settled.
Equity and Debt Investment in real estateCrowdfundUP.com
offer a premium debt and equity property investment opportunities.
The differences are simple enough but by selecting the best fit personally, investors position themselves to optimise their portfolio.
Debt investment involves lending capital to a company and receiving repayment at regular intervals with interest. Comparatively, an equity investor is buying a stake in the company that owns the property assets and will earn a share of the profit.
Is Property crowdfunding Investing Worth It?
Have you jumped in on and tried crowdfunding investments?
Real estate crowdfunding allows Investors to use technology to vet deals more efficiently. In turn, real estate crowdfunding platforms are very transparent with their transactions, and they’re able to share more profits with their investors due to less costs associated with capital and overhead operations.
The huge majority of crowdfunding platforms offer both equity and debt opportunities in real estate ventures. For many reasons, this kind of crowdfunding has exploded in the last year or two. Besides the “reward-based” peer-to-peer lending sites (which are technically considered crowdfund investments), real estate equity crowdfunding is the most popular form of this investment genre as of late 2017.
With so much money flooding into crowdfunding, there are now many platforms offering a wide variety of investment options.
If you want something that feels more exciting, gives you more action and activity, give yourself more control over your investment portfolio and is far more interesting to talk about — go with crowdfunded real estate investing.
You can access all our new and upcoming investment opportunities by creating your account at CrowdfundUP.com
Feb 06. 2018