Crowdfunding is using the advantage of having easy and accessible connections to various people through friends, relatives, and especially social media. The idea is that the said contacts willingly donate a small amount of money. A large number of people giving a small fraction of their fortune manages to generate a large sum of money quickly.
This method is used for various projects it is even used in real estate. Before the era of crowdfunding, you must have the right connections to invest in real estate however that has changed. This kind of investing offers several benefits to investors. It is more transparent and accessible than the traditional way of investing. On top of these, it also has tax benefits.
According to a research done by the North Carolina State University, crowdfunding can be a tool to enable innovation in entrepreneurs. This is because crowdfunding is less about the money and more about the backers. The backers are not only giving money to projects but they are also raising awareness of the product that helps it attracts more people.
Here are some important statistics on the success of crowdfunding:
- Last 2015 equity crowdfunding portals cultivated 12 times than what they did last 2012 since they managed to raise $344 billion
- When it comes to investing in technology start-ups one has to hold their position in any type of investment for a span of 7 years
- It is expected that the crowdfunding will grow up to $3000 billion in 2025
- An estimate of 344 million households in the developing world would be able to deploy $96 billion annually by 2025 in small crowd funded investments in community businesses using savings.
- As the pool for eligible investors come in and grow liquidity for retail investors will be crucial.
- There is room for growth in the crowdfunding industry. So far it only takes up $2.5 billion of the U.S. commercial real estate which has the total of $7 Trillion.
- The average number of IPOs per year went down between the years 2001 to 2011. It downsized to 99 when the average used to be 311 in the years 1980 to 2000.
- In response to the market volatility 62% IRA investors have reported that they will or have increased their shares of non-traded alternative.
- 2016 is the year that alternative assets dominated over 26% of total institutional portfolios.
Millennial Investors Incoming
Millennials are about to become financially secure with the oldest of them entering their forties by 2020. According to a 2015 study by Goldman Sachs, most of the assets of millennials are in cash. They also prefer to invest in a company that has a positive impact on the society even if the potential for monetary returns is higher with companies that have a negative impact on society.
Doing more with less is a strategy millennials do in order to save the money that they have. They have also started using equity crowdfunding sites to capitalize on the foundation that the market cannot fulfil.
Increasing foreign investors in real estate
Crowdfunding opens up the doors for possible investors overseas. Foreign investors are always seeking ways to participate in other markets. Investing in real estate is something that would definitely be interested in.
Crowdfunding sites are growing strong
While crowdfunding can be done through social media sites there are websites that are made solely for crowdfunding. The following sites will continue to grow next year with the crowdfunding continuing to grow strong.
- Patch of land
- Realty Shares
In 2018 these sites will become more popular and attract more investors. Several new sites will probably come out and compete with the growing industry.
Crowdfunding Apps are a need
There are hundreds of apps out there. As the crowdfunding industry grow the need and demand for easy access to the mentioned crowdfunding sites are going to grow. Apps make sure that the productivity of a person does not drop even if they are always on the go. Crowdfunding apps are going to be a vital part of the industry since the market is always in the hurry living the fast life.
Crowdfunding the retirement
While the young generation loves to live in the moment they are also planning for the retirement in between the parties. Crowdfunding is becoming an option to improve the retirement plan of an individual. Using this method it is possible to get more out of the retirement plan. This goes against the current method of saving up for a retirement plan wherein the individual has no control over the money
Real estate crowdfunding is definitely competing strongly in 2018. It may be new but this gives it more room to grow and to have more benefits as time goes by.