What is Real Estate Crowdfunding?

crowdfunding for real estateCrowdfunding is no longer a buzzword reserved for startups and tech entrepreneurs. Today, crowdfunding is a well established vehicle for entrepreneurs to leverage the power of the ‘crowd’ while enabling the crowd to participate in exciting and/or lucrative projects.

 

Rewards Based Crowdfunding

Companies like Kickstarter and Indiegogo have cleared the path and helped legitimize crowdfunding as a mutually beneficial way of financing a project. These are both examples of rewards based crowdfunding platforms. The investor has freedom and choice over what projects they contribute to and will receive ‘rewards’ when the project is completed or fully funded. Rewards are generally scaled to the amount of donation given (i.e. a t-shirt, pre-sales, product prototype).

 

Equity Based Crowdfunding - Real Estate Crowdfunding

Equity based crowdfunding gives investors the opportunity to make money on their investment. They are not merely donating their money to a cause or to help get a new project off the ground. Rather they are purchasing ownership in a real asset or security, with the intention of profiting from their investment in the future.

 

Real Estate Ownership through Equity Based Crowdfunding

Equity crowdfunding enables investors to pool their funds to purchase ownership shares of investment-grade real estate. Investors enjoy the economic benefits of owning direct real estate - earning cash flow income, potential market appreciation and mortgage principal paydown. It empowers individuals to invest in their neighbourhoods and transform their communities. Investors have a real stake in the future growth potential of the property.

 

Investing in real estate through crowdfunding engages investors and empowers the ‘crowd’. The crowd acts as a built in vetting system that can weed out poor investments and promote strong ones. Only those projects that are collectively beneficial will be realized.

 

Real estate crowdfunding has the added benefit of providing greater access to private transactions. Real estate transactions were once limited to opportunities found through your personal networks. Today, through real estate crowdfunding, the market is more transparent and investors can choose from a variety of properties to invest in.

 

The market is poised to grow rapidly in Canada and with the help of equity based crowdfunding platforms, like Open Avenue, real estate investing has never been more accessible.

Open Avenue is a passive real estate investing platform that gives you all these advantages and more. View investment opportunities here.

 

By Tim McKillican

tim.m@openavenue.com

Posted on April 6, 2014 in Crowdfunding, Real Estate

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About the Author

Tim McKillican is the Founder of Open Avenue and has a number of successful start-ups under his name, including Level Social Inc., a social media company. Tim is a University of Waterloo graduate in Computer Engineering and has been a lead investor in over $30M of commercial real estate. Tim has a passion for disruptive technologies and is excited to bring new real estate investment opportunities to the mass market.

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