Invest in real estate online: Guide
There are a considerable number of ways to invest one's money. Some people opt for "classic variants" of investing (for example, stock investments or the purchase of houses and apartments), while more and more people are also positively disposed toward new forms of investment.
Crowdinvesting is a particularly exciting and new type of investment. A large number of people invest in a (mostly real estate) project. The attractive thing about it is that you can start investing with very small amounts of money in the double-digit range.
So in this post, let's take a close look at how "investing in real estate online" works.
What is Crowdinvesting?
If you look at the word "crowdinvesting", it quickly becomes clear what it is all about: the "crowd" (i.e. a larger group of people) invests in a specific project.
These campaigns often involve new startups or, for example, artistic campaigns. Increasingly, however, crowdinvesting is also being used for real estate.
Those who invest in real estate online via crowdinvesting help developers by providing equity.
Developers looking for equity contact crowdinvesting platforms and agree on the target capital to be raised. Investors on the online platforms receive regular updates on the progress of the construction project.
Crowdinvesting has become so popular that there is also a law for "swarm financing". Crowdinvesting is therefore regulated by law and is thus subject to certain provisions.
What brings Crowdinvesting the investors?
After investing a certain amount, you usually wait 1 - 4 years.
During this period, high interest income is already being generated.
Ideally, the developer has planned the project well in advance and has finished building/renovating the property. Then investors have the best prospects of high income.
However, great opportunities also entail high risks. With crowdinvesting, the main risk is that the developer goes bust (insolvency). In this case, the crowdinvesting investors have to reckon with the fact that the entire invested money is lost.
If you want to minimize this risk somewhat, you can divide your defined investment capital among many different projects and not just a single real estate campaign. This is easily possible on the various online platforms.
What are the main Advantages & Disadvantages of online investing?
Among the largest Plus points of crowdinvesting - apart from the uncomplicated entry - is probably also the fact that the properties are not exposed to price fluctuations. This means that you don't have to check prices regularly (as you do with shares, for example).
Another huge advantage is that even very small amounts can be invested. For many platforms, the lower limit is between 50? and 100? A single investment in this area will not bring much - but it is possible to divide a larger amount among many different projects and thus also minimize the risks.
The returns are very high with crowdfunding - higher than with many other forms of investment. If we assume average and realistic returns of between 6 and 8 percent, considerable returns can be generated even with smaller investment sums.
Of course, every form of investment also has Disadvantages. Although it has happened rather rarely in the past, developers can become insolvent. Crowdinvesting investors then lose their entire investment, which must then be written off as a total loss. In the event of insolvency proceedings, the crowdinvestors also have subordination.
If you want to invest a lot of money, you can't do it through crowdinvesting. In order to keep the sums invested roughly in balance, the sums are also limited upwards.
In summary, investing in real estate online is easier than ever these days.
A few clicks are all it takes to start investing on one of the many crowdinvesting platforms.
Before you start investing, however, you should inform yourself about the projects and assess the risk. In principle, crowdinvesting projects harbor attractive opportunities for returns. At the same time, however, the risks are also greater.
Anyone who is interested in crowdinvesting and would like to invest money online can give it a try. However, as with any investment option, we recommend that you initially invest smaller sums of money, so that in a worst-case scenario it would not be the end of the world if the money is gone.
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