Property Crowdfunding

Crowdfunding is a method of raising money by taking contributions from a large number of people. It is used for funding investments, businesses, and other projects and is often carried out online. In this model, individual investors usually contribute a very small percentage of the overall amount.

Crowdfunding for property is relatively new, as it only came about as a result of online crowdfunding systems, and only made genuinely viable with the rise of online banking and other secure payment systems. While online crowdfunding has been around a little longer, crowdfunding specifically for property only really took off in the past ten years.

There is no difference, typically, between crowdfunding for property or for other projects. Property investment projects are listed on crowdfunding websites online to advertise for investors. These projects are pre-negotiated deals, ready to go, and are simply seeking additional funding.

There is no real limit on how much or how little individual contributors can invest, but often the project manager will set minimum investments for specific projects.

Is Crowdfunding Popular?

Property crowdfunding is still a new practice, but it has quickly become very popular. Many companies have set up crowdfunding platforms, allowing for smaller investors to get involved in a lot more opportunities.

On the surface, it is a great idea. Crowdfunding spreads the cost of a property across many investors, allowing investors to be involved in property developments that would otherwise be well outside of their budgets.

Conversely, it also allows property investors to have small investments in a number of properties at once, which reduces their risk.

Are Crowdfunding Companies Safe?

Property crowdfunding is strongly regulated by the FCA. Any company offering property crowdfunding must accede to a strict code of conduct set out by the FCA, including business practices and due diligence on each property they put forward.

How Does Crowdfunding Work?

As with all crowdfunding projects, property crowdfunding has a very straightforward process.

Choose the project you wish to be involved in, and then you can invest in the company that has set up the project. Once enough capital has been raised by you and other investors, the property purchase will proceed.

When the purchase is completed, all investors become shareholders and will receive their shares of rental return and capital growth. The more you invest, the greater your share of the returns.

Is This a Good Investment?

There are several benefits to crowdfunding that you cannot get in other forms of property investment. As the project is already established and seeking investors, all the groundwork has been done. You don’t need to get involved in surveys, refurbishment planning, finding buyers or sellers, or any of the other work that is standard with a property investment. All of that is arranged by the investment company, along with stamp duty and any fees there might be.

It also allows you to invest very flexibly. You can invest small amounts in as many, or as few, properties as you choose. There is usually opportunity to increase your investment in a project if additional funds become available.

Essentially, the benefits of property crowdfunding boil down to choice.

You can choose how much to invest, across how many properties you prefer, allowing you to diversify your portfolio even with a relatively small budget.

There are a wide range of property types to invest in, from buy-to-lets, refurbishments, HMOs, and more. This also applies to location. You don’t need to be directly involved in the project on a day-to-day basis, so you can invest in property across the UK.

Time frames are another variable you can look into. With such a range of options to invest in, there is scope for you to choose shorter projects of 12 months, or more long term 5 year investments.

All the background work is done for you by experienced property professionals. FCA rules and high standards ensure that the project won’t even be listed for investment if it doesn’t meet their criteria.

Overall, this is an excellent way to invest in property without having to do everything yourself, or having to handle the full financial burden on your own.

Investing in property, similar to any other form of investment, involves inherent risks. Our website, services, or products do not constitute financial, tax, or legal advice, and should not be relied upon as such. Before making any investment decision based on the content provided on our website, products or services, we strongly advise seeking independent specialist advice from appropriate professional advisors.
Your capital is at risk. The value of your investment can go down as well as up. Historic performance and forecasts are not a reliable indicator of future performance.

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