The property market can be a minefield, especially if you’re looking to get your foot on the ladder as a first time investor.
And, with plenty of investment opportunities available allowing you to take advantage of investments across the entire spectrum, buying property as an investment has never been so easy.
If you’re looking for the best way to get started in property investment, it certainly pays to have an idea of the different ways that you can fund your project, including the ins and outs of crowdfunding.
After all, crowdfunding is playing an increasingly important role in the property sector.
What is crowdfunding?
It’s highly likely that you will have heard of the term crowdfunding, but did you know that crowdfunding is becoming a great way to secure capital from a wide range of investors to fund a diverse of construction and property projects?
Over the years, an increasing number of investors have worked alongside crowdfunding companies or pooled together in order to fund the construction of iconic buildings, mass housing projects and large scale renovations.
A new type of crowdfunding
Shojin has created a new type of Crowdfunding known as Crowdfunding 2.0. Based on the same principle of a borrower needing funding from a property investor that has money, this type of crowdfunding involves us partnering with both parties and not just acting like a middleman.
For example, the borrower comes to us with a project brief, we run through all of the numbers and, once we’re happy with the project, we will put our own money into the project and put it on our platform for investors to review. We oversee all aspects of the project, ensuring that each stage runs seamlessly. And we don’t take fees upfront.
We partner with everyone, so our interests are all aligned.
What are the advantages of crowdfunding?
There are many advantages that come hand in hand with crowdfunding, allowing you to optimise a whole host of opportunities within the property sector.
And although as a solo investor, you wouldn’t necessarily be able to buy an entire block of flats and turn then into student accommodation, as a group of like minded investors you could. If you transport your mind back to 20 – 30 years ago, this opportunity was only available to very wealthy individuals and families, institutions, and people with access to money.
Today, crowdfunding is making property investment more accessible than ever before to people from all different walks of life, allowing you to invest as a group and invest only has much as you can afford.
Access to more opportunities
In the past, developers would have contacted wealthy investors if they were looking for investment opportunities. However, thanks to crowdfunding, property investors with £100, £2,000, or even £20K can now pool their money together to invest in an array of property investments.
Diversify your risk
When it comes to investing in any property, it’s essential that you diversify your risk. For example, it’s vital that you understand that for every project you invest in, your capital could be tied up in that property for as long as 10 to 20 years.
However, just say you invested £100K in a property through a crowdfunding company, you will be able to spread it across 10 different properties, in different locations. This will instantly mitigate your risk by ensuring that you don’t put all of all your eggs in one basket, ultimately spreading your investments to reduce your risk.
Hands-free investment
This is an armchair investment that you don’t have to be involved anymore. For example, you don’t need to worry about tenant issues and regulations as the government does not want individual landlords, they want institutional landlords. Even when you give your property to an agent to manage you still have to manage the property and approve things. This model is a completely hands-free investment as we take ownership of everything and we just provide you with a return. Oh and you won’t have to endure 1:00am calls from tenants to let you know that their boiler has broke down.
Crowdfunding as part of a balanced portfolio
At different times in your life you need to invest in different products with different risk reward ratios. When you are young you can take on more risks however, as you get older you need to be more conservative. Crowdfunding allows you to spread your risk and create a diverse portfolio overtime to meet your lifestyle needs. You can also stagger the investment so that some investments are paying out monthly while others are on an annual basis, or even in 3 years’ time. This means that you are in charge of your property investments and can build a portfolio that is right for your lifestyle, in a way that works for you.
As you can see, there are plenty of benefits that come hand in hand with investing through crowdfunding. For further information, please register online, create an account, and learn more.
