Crowd-funding refers to the use of small amount of money from a large number of single entities to capitalize a new business. Crowd-funding makes the broad network of individuals easily accessible through digital media. Crowd-funding platforms bring investors and entrepreneurs together also has the potential to raise entrepreneurship by spreading the pool of investors.
Crowd-funding is a process of collecting capital for business and an easy way to access such procedure for investors. By utilizing digital media it reaches a crowd of potential investors. General idea of crowd-funding is that a lot of people wants to invest a small amount and by doing so a large amount of capital can be collected very quickly.
Before, Crowd-funding was mostly connected to equity transactions, where companies would use the process to increase finance.
Crowd-funding pulls money together so that small and middle ranged could use the capital to invest on buying or building a manufacturing plant. The process of crowd-funding offers companies to gain capital which might not be possible to collect on their own.
So, crowd-funding is offering the investors to become a shareholder or stockholder of a company or in a real estate property. this is how the real process of crowd-funding works.
Equity investment gives high returns if compared to debt investment. If you invest in this way, you will get returns based on the property’s rental income quite less than crowd-funding platform cost. Pay-out like this usually sent quarterly and when it’s sold the investor gets a share of the property appreciation value.
Debt investment is mostly chosen route for investors for its simplicity on investment. In this type of investment you lend capital to the owner of the property. In return, you will get a certain interest based on the owner’s mortgage loan and your invested amount. Payment for this investment is generally given quarterly or monthly. You will get your invested amount on a certain date.
1. You gain entrance to low-levels of investments with some projects.
2. You can do short-term investments ranged between 2 month and 48 months
3. Investment fees are less on peer to peer lending by which you will get higher return.
4. You will get the benefit of transactions transparency as you will know where your funds will be invested.
5. Real estate crowd-funding gives you the opportunity to diversify your investment on various properties in various countries.