Is Now The Time To Invest In Real Estate Crowdfunding?

Real estate has always been an attractive proposition for investment. There are so many ways to track the property market, and if you make the right choices, you can end up making a lot of money. The problem with investing in real estate has always been that only those who had serious capital or a high tolerance for risk could invest. Buying a property was an expensive and arduous undertaking, and one that may not show dividends for years.

Recently, the idea of real estate crowdfunding has been made possible by a few pioneers. One of the biggest pioneers is Fundrise. You can see a Fundrise review here.

Real estate crowdfunding works by letting you invest relatively small amounts in the property market, as if you are trading in any other market. You are not buying a property, but you are still investing in one or more.

How exactly does real estate crowdfunding work? And, with the market currently at a relatively low point, is this the perfect time to invest?

Understanding real estate crowdfunding

Investing in real estate through external portfolios is not entirely new. The concept of REITs (real estate investment trusts) has been around for a while. However, in the past, you had to be in the right place at the right time or have the right contacts. Your options were limited mostly to circumstance.

Real estate crowdfunding takes the idea of REIT investing to a much grander level, while simplifying it. It brings tons of REITs together, providing tools with which to invest in them. You can invest in the property market with a diverse portfolio, without the huge capital or tremendous risks.

Fundrise has been around since 2010 and has made some of the biggest waves in crowdfunded real estate, such as when it introduced eREITs in 2015. Investing in an eREIT is similar to investing in an ETF or mutual fund.

So, should you consider investing in real estate crowdfunding today?

Assessing today’s property market

The property market tends to move more slowly than other markets. At the moment, it is still going through a bit of a downward slump. Prices are low, providing many avenues for investment.

However, the case for investing in eREITs is not so simple. Property prices could continue going down for a while and might crash further before turning around. It is the sort of market risk averse traders might stay far away from.

But with real estate crowdfunding, you no longer have to be as risk averse in the property market. You can make some shrewd investments now, while continuing to monitor the market. These probably need to be viewed as long term investments. If the market continues on a downward trajectory, you should be able to let them be for a while. Ultimately, if it drops further, you will get the chance to make even more investments at a lower price and eventually benefit from both sets of investments.

The property market is still not a simple one, as it doesn’t usually fluctuate at the same rate as other markets do. With real estate crowdfunding, you can invest in the market without making the same tremendous commitments.