Shall I invest in crowdfunding?

Question

Hey everyone, would you recommend investing in crowdfunding or do you know anyone who did so?

Ian Ippolito · Answer

I live off of the income from my passive investments which have quite a bit of crowdfunding/syndications in them. Crowdfunding is essentially the same as old-school syndications but they are made available on the Internet.

If you are an aggressive investor then you will find hundreds of opportunities a month there.

On the other hand if you are very conservative then it will be more difficult because some of the most experienced sponsors do not need to use crowdfunding at this stage of the cycle (i.e. they have developed an enthusiastic investor base over the years who will quickly overfund their deals). Occasionally you can find these types of sponsors on crowdfunding but they are more rare. If you're looking for this then I would also recommend networking for deal flow and/or joining an investor club.

If you're not sure where you fall then it could be useful to start looking at deals (without purchasing), learning how to do due diligence and taking your time to figure it out.

Dan LaFontaine · Answer

I second @Taylor L.'s preference. That being said, it's hard to find and get into good MF syndication deals, they tend to subscribe quickly and often with the same existing group of investors. CF is certainly more accessible, but it's almost like picking stocks or angel investing in startups... if you can, you might want to spread the $ across a few deals, doing less on each. You slightly mitigate your risk and you get exposure to more deals for learning.

Check out platform reviews at https://www.therealestatecrowdfundingreview.com/

Lane Kawaoka · Answer

Crowdfunding websites charge operators 5-10% as a promote rate. Only desperate syndicators use this who can't raise their own money.

Plus I only invest with those I know personally.

Taylor L. · Answer

@Ian Ippolito is one of the leaders on that topic on BP.

I feel private syndications offer better returns. The more experienced syndicators do not typically need to use crowdfunding platforms, because they have long lists of investors clamoring to get into their deals. It takes a bit more work to find them but it's not, say, more work than your day job.

Login George · Answer

As i am interested in investing in LP opportunities, I have been wondering about the pros/cons of finding opportunities on the online platforms versus connecting individually with operators/investors clubs. My sense was the latter is perhaps better and many of the above responses confirm that. So thank you everyone for your responses

Chris Seveney · Answer

I agree with many posts here, most crowdfunding sites is like the loopnet of commercial real estate - only deals that cannot make it to the next level make it to crowdfunding sites. These are typically deals by investors who have less experience and market knowledge as well. You are better off going with true syndication than a crowdfunding site. You would be surprised how many people have funds for all different types of real estate and alternative investment strategies.

George Reed · Answer

Crowdfunding could become a good option for those who don’t have so much money to invest directly. Some crowdfunding platforms, like realtybundles that I know, offer to invest just 1000 euros. It is not so much. This is a passive investment, it’s true. But it has its own advantages like you let the crowdfunding platform to do all the management and you don’t need to be involved in this process if you don’t have much time for it. Also, it is an online investment, so it can be an appropriate way if you want to invest in foreign properties.

Shall I invest in crowdfunding?

Shall I invest in crowdfunding?

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