Crowdfunding has become a trending buzzword in the real estate industry in recent years. This popular funding or financing alternative offers investors a new path toward property ownership.

In other words, commercial real estate crowdfunding unlocks significantly more investment opportunities and enables investors to diversify their portfolios with smaller amounts of capital.

In this post, we’ll share the top benefits of commercial real estate crowdfunding so you can decide if this strategy suits your specific needs and circumstances.

Real Estate Crowdfunding Explained

Real estate crowdfunding is an extension of equity crowdfunding that enables property investors to raise money via social media (Facebook, LinkedIn, etc.) or popular crowdfunding platforms, such as Fundrise, Yieldstreet, and RealtyMogul.

It’s a popular solution among low-budget accredited/non-accredited investors looking to buy a small chunk of a property with other investors for a share of the rental income and future sale profits.

3 Reasons to Opt for Commercial Real Estate Crowdfunding

Here are some of the most lucrative benefits of crowdfunding a commercial real estate property:

1. Minimum Capital Investments

The most obvious benefit of real estate crowdfunding is low capital requirements. Traditionally, solo investing in any property has been an expensive endeavor – one that’s only available to wealthy individuals. Crowdfunding levels the playing field and allows more investors to enter the market. Crowdfunding also reduces investment risk significantly since it’s shared among several investors.

2. More Portfolio Diversification Opportunities

Crowdfunding transforms real estate investing into stock trading by enabling investors to procure more properties while enjoying less volatility. Moreover, with this strategy, investors can target different types of properties (single-detached homes, multi-family apartments, condos, etc.) in multiple locations.

3. Less Competition and More Transparency

Commercial real estate crowdfunding is a relatively new investment practice. However, there’s been a rapid influx of crowdfunding platforms designed specifically for this purpose. Moreover, investors in this space can enjoy early-bird property deals and gain more experience while the practice is relatively fresh.

Unlike REITs, crowdfunding offerings offer greater transparency and control in terms of asset location, selection, and control. In other words, you don’t have to invest in markets or properties you’re uncomfortable with.

Wrapping Up

Commercial real estate crowdfunding is growing rapidly due to the lucrative benefits it has to offer. However, this doesn’t mean it’s the right solution for every type of investor, especially those prioritizing liquidity and control. So, make sure you analyze the pros and cons carefully before opting for this route.

For more interesting reads related to real estate investing, visit the CHRE website. You can also engage with our real estate experts to help you find the best properties for sale in Rio Grande Valley.