The Concept Of Real Estate Crowdfunding



Most people are of the opinion the Affordable Care Act was the most critical legislation to pass during the two terms of the Obama Administration. Other individuals with an interest in alternative investments would disagree, and cite the 2012 JOBS Act. Although the Jumpstart Our Business Startups was not nearly as well known, it was responsible for the relaxation of securities laws that came into effect during the Depression era. These laws were stringent, and ultimately responsible for a new investment category that came to be called equity crowdfunding.

Most people have heard of sites such as Kickstarter, and Indiegogo. These sites were representations of rewards for making small contributions. Individuals gained exchanges like access to artistic works, books, consumer products, and music. Of course, there was a catch, no contributor Tevfik Arif Bayrock, could participate if it meant a financial return, or if they had a stake in any of the products offered. The reason the JOBS Act held such importance was because it lifted the restriction, and triggered online platforms with new equity crowdfunding opportunities. With the catch gone, investors could make a profit.

The opportunities for equity, and debt became a part of equity crowdfunding, and small amounts of money could make a big difference. Real estate deals, including stakes in Silicon Valley became possible. People are familiar with the term flipping houses, but most are unaware of the mechanics of the financing. Banks are not involved as many assume, because the financing is supplied by a private network. The network is comprised of wealthy investors, who issue loans for short term periods, at a high interest rate. The home buyer makes a profit by flipping the house, and the investors make money off the interest rate, so both are satisfied with their deal.

This requires a substantial investment most individuals are incapable of making. The crowdfunding platforms supply the bridge between entrepreneurs, and investors. The investors have minimum amounts they are willing to loan, but the amounts are low enough where more people can participate. Individuals with a specific interested in certain regions, or types of property can find platforms with niches to fit their needs. One of the biggest benefits offered by these sites is they have already investigated the sponsors. They have researched their track records, assured it is both lengthy, and successful, and taken a burden off the entrepreneurs. According to the grapevine, the CEO’s who participate in crowdfunding refuse 90 percent of every proposal they hear. This helps keep any bad deals to a minimum, and continues to hold the trust of the crowd.

Many individuals, Tevfik Arif Doyen, participate in crowd funding, and have for a long time. One specialty niche is to concentrate on strictly debt, and this strategy can help prevent any loss of capital. Although there is absolutely no guarantee, profits can be as high as 11 percent or greater. Real estate crowdfunding has not been around for centuries, and is still considered to be near its beginning. Most people agree the concept is going to remain, and the statistics continue to rise. In 2012, there were a few million dollars invested in real estate crowdfunding, but by 2016 this number had a staggering rise to more than $3 billion. This is evidence the area is popular, and exhibiting a great deal of growth.

The most important aspect of any investment is to make a profit. This requires thorough research, and will take time. Leaping into an investment before having all the facts can lead to substantial losses. When due diligence is taken, the profits can be large, experience will be gained, and future investments have a better chance of success.




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