In the past few years a new way of investing – crowdfunding – has emerged. It has quickly become a popular avenue of alternative investments for many people. The concept of crowdfunding is based on gathering small amounts of capital from a large number of individuals to finance a new business venture. In today’s world, as financial products are getting more and more complex, crowdfunding provides a relatively simple and straight forward approach to investing.
To put crowdfunding in numbers, in 2012, crowdfunding was $2.7bn industry and in 2015 it had already rapidly increased to $34.4bn. This equates to roughly 13x increase in 4 years time. Lion share of the total crowdfunding belongs to P2P lending. It is followed by equity based crowdfunding (aka crowd investing), which is doubling its size each year (Mass Solution Crowdfunding Report).
Real estate is one of the industries, where crowdfunding has shed a light as a new way of gathering investments. Due to its capital-intensive characteristics, real estate is now broken down into smaller chunks, thus making it easier to find financing for projects. According to Mass Solution Crowdfunding Report, real estate crowdfunding is also one of the fastest growing segments in the crowdfunding industry. Most of real estate crowdfunding is currently done using debt, however, according to LifeSreda’s report ‘’Money of the Future’’, real estate crowdinvesting is starting to gain momentum. The main difference between real estate crowdfunding and crowdinvesting is that in crowdinvesting people become co-owners of a property, enjoying the benefits of rental income and capital appreciation, whereas in real estate crowdfunding people receive fixed interest on a loan provided to a developer.
BitOfProperty’s business model is based on crowdinvesting. People can explore different real estate deals on the platform and find suitable ones for them. They can start investing with as low as €500 and diversify their portfolio. This is also one of the benefits of crowdfunding in general that people do not need to commit a lot capital into each deal. Real estate is intuitive, easy to grasp and tangible, thus making the investment straight forward for most people. The combination of crowdinvesting and straight forward asset class like real estate, provides a good avenue for people to start investing. BitOfProperty brings these two qualities together into one platform.
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”Money of the Future” by LifeSreda – https://fintech-research.com/
Mass Solution Crowdfunding Report – http://crowdexpert.com/crowdfunding-industry-statistics/