An industry now worth in excess of 5 billion USD, the crowdfunding concept has been growing exponentially; in part due to its proliferation within emerging markets and growth within new markets, such as property.
What is crowdfunding?
Crowdfunding is where a venture is funded through multiple small payments. Typically, crowdfunding is organised through a moderator, or platform like Kickstarter, Crowdfunder or Emie, who processes payments and also helps to publicise ventures.
Prospective investors can peruse the projects available and select the one that appeals most. They can then choose to make a big or small contribution to their selected venture, depending on their requirements. The crowdfunding concept has brought investment – previously the domain of wealthy investors in boardrooms, to the fingertips of thousands of ordinary people, who would not identify themselves as ‘investors' per se. Accessibility is key to the exponential, worldwide growth of crowdfunding.
Crowdfunding and property
Property has become the latest niche in which crowdfunding is being practiced. In its infancy, crowdfunding was mainly practiced in relation to tech start-ups, who would traditionally have sought funding from one, maybe two investors. However, as is evidenced by the latest property-orientated crowdfunding ventures, the concept is growing and expanding to incorporate new possible investment opportunities for a wider spectrum of people.
The basic premise involved with property crowdfunding is that lots of buyers buy a property, as opposed to the traditional single or a small number of buyers. Most crowdfunding schemes in connection with property take care of the legal fees, search fees, and other professional fees so these are not ‘hidden extras'.
An example of crowdfunding for the property is The Crowd House, where you can invest in property for 1000 pounds.
Pros and cons of crowdfunding with property
Though the concept is a new one will take years, maybe even decades for the full spectrum of pros and cons to be revealed.
Property crowdfunding – is it for me?
Lots of people are turning to property crowdfunding as a means to invest their cash, but as with any investment opportunity, you should carefully consider what is right for you and take professional advice too, if appropriate.