Whether you’re a seasoned investor or you’ve just started to dip your toes in the real estate investing waters, it’s important to understand the value that comes from diversifying your portfolio. Any investment strategist will tell you that by allocating investments among various opportunities, investors reduce the amount of risk they expose themselves to. Diversification doesn’t mean you’re protected from loss, but it can act as an insurance policy to help you reach your long-range financial goals.
A popular online real estate investment channel that has been on the rise since its introduction is peer-to-peer lending through crowdfunding. While this is still an emerging sector, there are big advantages over traditional lending and investment methods for all parties involved.
With the addition of technology advances, the entire process of investing in and funding real estate development has become so simple that a project can be completely funded within days! In fact, according to a study from World Bank, they expect the global crowdfunding market to reach $96 billion by 2025!
Investors Benefit from Online Real Estate Investing
It’s not just developers that are reaping the benefits that come from sourcing the crowd for financing. Prior to advances in crowdfunding and the passage of the JOBS Act, investors had a small pool of deals available to them, especially if you didn’t have the industry connections needed to stay abreast of available opportunities. This meant that as an investor, you were very limited, and you probably didn’t have access to the best, most profitable deals.
Crowdfunding portals such as Patch of Land give investors opportunities all over the country, and offer a way for investors to minimize their risk with short term investments starting as low as $5,000. These short term opportunities range anywhere between 30 days to 12 months, and also provide an average return of 10-18% - all while eliminating investor fees.
This points us back to the importance of diversification. With small investments in different projects, investors are able to diversify their portfolio in unparalleled ways. Now, investors can diversify via cost, type of project, developer, length of opportunity and more - all within one platform. The fear of putting all of their eggs in one basket is eliminated.
Furthermore, the technology introduced into online real estate investing platforms allows everything to be done in one place--documents are signed digitally, funds can be transferred via wire, or even withdrawn or reinvested after project completion. No traveling, no phone calls, and no meetings…it’s as simple as a few clicks! Deals are funded quicker and any questions investors have can be found within minutes. The technology has been designed to make the entire process seamless from start to finish.
Ease, Efficiency, and Transparency
With many online real estate investing platforms, the signup process for investorsis relatively quick and easy. Once started, investors will have access to an investor dashboard that allows investors to visualize everything your money is doing. Transparency is paramount for many of these platforms. You’ll also find that one of the differentiators in the real estate crowdfunding space is whether or not the platform pre-funds the project. Our company Patch of Land, performs an extensive due diligence process and, should the project pass the test we’ll pre-fund the deal – in short, and put our money where our mouth is.
Whether you’re a seasoned investor or brand new to peer-to-peer and alternative lending, consider exploring your online real estate investing options. Within minutes you can diversify your portfolio and become a national real estate investor! Crowdfunding is gaining a lot of momentum and as an investor; you’ll want to be involved. Start investing today!
Jason Fritton, CEO and Co-Founder, Patch of Land
Jason leads operations, ensuring that the Company's due diligence practices and client services are best in class. Jason has been involved with crowdfunding legislation since the beginning and worked with Congressmen to lobby for the crowdfunding exemptions that were written into the 2012 JOBS Act.
He is a graduate of Cornell College and studied molecular biology, philosophy, and history.