Real Estate is a powerful investment. The property market is usually fairly reliable and remains to be an investment that many young investors hope to afford one day.
With the emergence of the internet and information, many investors look overseas for their property now, and there are some high growth markets to be found (ie in much of South America).
As opposed to the hassle and high capital of investing in a property overseas, real estate crowdfunding such as Crowdestor offers a shortcut: a way to invest in real estate all over the world, with no saving up for large deposits, no traveling, no managing, and no paperwork.
Here are the key 5 advantages of real estate crowdfunding investing.
No admin or management
Real Estate investment has a reputation for being hard work. Deals falling through because of long chains, waiting for mortgage approval, dealing with long complicated contracts. There is usually never direct communication, it is always done through a middleman or agency. And when this an overseas property, you can triple the headache.
Real Estate crowdfunding avoids all of this. The property investments can be co-owned by yourself without having to administer anything. No translating documents or dealing with agencies!
What’s even more impressive is that this avoids having to be a landlord. Professionals are in charge of everything.
This is as close to anxiety-free real estate investing as it gets.
The minimum capital required for most investments is just a couple of thousand euros.
Prior to crowdfunding, real estate was only for those who could save up enough for deposits, which will run into tens of thousands. This is hard enough, let alone being approved of a huge mortgage and having to repay hundreds in interest each month.
The low investment minimum means this can be debt-free investing, which is rare for real estate.
While you may not get the benefit of leverage, you don’t get the risks of it either. The threat of negative equity can be something of the past.
The affordability of crowdfunding means that many small additions can be made to a portfolio, to add some diversification too.
Crowdfunding is centered around the Internet, and the real estate crowdfunding investments are no different.
The focus on the Internet has meant that crowdfunding uses the benefit of democratized information. There are many news websites, online forums, as well as information from the platforms themselves. Compare this with real estate agents, who are known to withhold information.
There is greater transparency in crowdfunding, even compared to REITs, which are often limited in the information of the underlying investments.
Maximum information and transparency mean that the investor is more equipped to make an informed decision.
The focus on the internet provides other benefits, too.
Firstly, investments are made remotely. Instead of having to go for property viewings on the other side of town, you can invest in a property opportunity in Shanghai from the luxury of your own home.
Not only does this increase the number of opportunities you have, but it reduces the time and cost of pulling out and changing investments. This, in conjunction with the increased liquidity, means there is now no reason to hold on to bad investments. They can be bought and sold very quickly.
Most crowdfunding platforms operate on mobile apps, too, making it extremely quick to get updates on an investment. The focus on apps, and the reliance on online customer reviews being a basis of trust, means the platforms are extremely customer service orientated.
Diversification is the key to mitigating risk in any portfolio. However, currency diversification is often overlooked compared to geographic and market diversification.
The remote and global nature of crowdfunding investing means your portfolio could be made up of investments from different countries, with different currencies.
You could even pair up investments in places that usually have an inverse relationship with their currencies. For example, if you deal with Euros, and you believe USD gets weaker against the Euro whenever the Chinese Yuan gets stronger, then pairing up investments from American with China may be wise. This could hedge against any large currency fluctuations.
With the political climate being a little unstable currently (see Brexit and the instability of the GBP), this may be a wise decision, with currency risk and volatility being high.
This content is brought to you by Shahbaz Ahmed.