Why real estate crowdfunding shines?

The idea is simple: Allow average investors to benefit from the not-so-average returns real estate can yield.

High dividends

Since most crowdfunded real estate sites work through REITs, investors get to reap their benefits. REITs, both public and non-traded, are legally mandated to pay 90% of their taxable income to investors. Because of this, many REITs offer a strong history of dividends.

Diversification

Adding real estate investments can help strengthen and diversify your portfolio. You may still have to pay taxes on the dividends you receive (unless you put those dividends into a tax-advantaged retirement account).

Low investment minimums

Some of these platforms have fairly low investment minimums. Fundraise offers a starter portfolio with an investing minimum of $500. This hurdle may sound high, but it’s lower than the minimums commonly charged by privately owned REITs (which are often in the thousands) while still giving investors access to privately held assets.

No landlord hassles

One of the biggest advantages of real estate crowdfunding is not having to handle the headaches that come with owning traditional real estate. It’s cool to invest in huge properties and never have to deal with frozen pipes or troublesome tenants (though you can also avoid this by investing in publicly traded REITs).

An easy investing experiences

The newness of these companies isn’t all bad: It means they prioritize easy access. Some crowdfunded real estate platforms offer apps that allow users to start investing quickly and easily from wherever they are.

Topics: Real Estate, Crowdfunding, Investment Returns

Work cited: Alana Benson, Nerdwallet, May 22, 2020

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