Five Best Property Crowdfunding Platforms suggested by Nicholas Statman.
One of the ways that property investing is different than most other types of investments is that you need a significant amount of capital to get started. Property investing can be an extremely profitable and lucrative investment strategy, but you have to have money to make money. First-time investors sometimes have trouble coming up with enough capital to invest in their first property. Some borrow money from the bank, others open up a line of credit, and more recently, eager investors are turning to crowdfunding platforms to help raise money to make their property investment dreams come true.
What Is Crowdfunding?
When it comes to crowdfunding, many people may think of online platforms that allow individuals to run donation-based, equity-based, or reward-based campaigns to raise money for a particular project or venture. You may be familiar with crowdfunding sites that help students raise money for university costs or other websites that specialize in raising money to cover medical bills or even fund dream vacations. However, crowdfunding is a little different when it comes to property investments.
Crowdfunding and Property Investing
When it comes to crowdfunding and property investment, it requires a little more than simply asking for money online. A report done by Property Investor Today found that “75% of property investors have turned to alternative finance over the past 12 months after struggling to secure loans from mainstream providers.” Crowdfunding sites are a popular alternative to mainstream providers. Instead of listing your project online and asking for money, crowdfunding sites for property investments allow you to take a small sum of money and invest it in a portion (or share) of a property. Once the property value increases, so do the values of your shares. You earn your portion of the rent after the costs from your selected investment are deducted. You receive your share in the form of dividends if there is a profit, and when the property is sold you earn a share of the proceeds from the sale.
Top Five Crowdfunding Platforms For Property Investors
Once you understand the details, benefits, and risks that come with crowdfunding, it is time to pick the right platform for you. These are five of the most popular crowdfunding platforms for property investors:
According to their website, “Kuflink’s award-winning online P2P investment platform unites professional borrowers with savvy lenders, providing a steady flow of accessible finance and better interest rates.” They offer three unique products, the Select-Invest, Auto-Invest, and Innovative Finance ISA. The Select-Invest option allows you to fund individual projects starting at just £100, and you can earn up to 7.2% in returns. Auto-Invest is how lenders can invest in some of the UK’s best property opportunities. Innovative Finance ISA is a specialized savings account with outstanding interest rates. Kuflink offers exceptional interest rates for lenders and fast access to money for borrowers.
Brickvest is comprised of professionals from the banking, finance, technology, property, and private equity sectors. Their comprehensive capital raising platform is flexible, cost-efficient, and secure. It gives property investors “access to a large and steadily growing network of qualified UHNW investors, family offices, institutional investors, and banks with wide-ranging risk and asset class preferences.” This means investors are no longer dependent on just a few investors or capital provider. They pride themselves on lower fees and better deals than traditional lenders.
Yielders is the place to go if you are interested in joining together with other investors to purchase a property. Yielders is an online platform that allows investors to come together and purchase a property that may be difficult to do on an individual basis. Another benefit in using this specific UK-based crowdfunding platform is that it gives investors access to properties that are typically only available to select investors. They work with properties that have already been acquired, and most of the time are already being rented, which means you start earning your portion of the income right away. One thing that sets this company apart from the rest on our list is that it prides itself on being the UK’s first Shariah certified fintech company.
Uown was created by two brothers in their 20’s, and aims to offer access to previously off-market properties with annual return starting from 6%. UOwn aims to give millennials a place in the property market; a market that has traditionally been inaccessible for this generation. One key factor that makes this company different than others on this list is their access to “proven performance” properties. They’ve coined this term to classify properties that have a reputation for yielding strong returns and have been doing so for at least ten years. According to their website, “prioritising simplicity to make the platform accessible to those without property expertise is the aim.”
Property Partner is one of the most commonly used crowdfunding sites for UK property investors. It allows just about anyone to invest in residential property, and the platform is designed to enable investors to choose from various investment strategies, including residential, commercial, and purpose-built student housing.You can easily choose a property and decide how much you want to invest, and the website even helps you build a portfolio and diversify it by investing in different types of property assets.
If you are part of the 75% of investors that are looking for alternative ways to finance your property investment adventure, crowdfunding may be the next right step for you. Many UK investors, and investors around the world, choose to crowdfund because it offers greater transparency, more accessibility, and improve diversification. And while I am not a tax professional and can’t get into the details, there are tax breaks that exist in this specific investment and finance realm. It is highly suggested that you speak with your tax professional to understand what tax breaks are available with property crowdfunding.
You’ll notice on every crowdfunding website that companies make it very clear that capital is at risk. Just like with any other investment strategy, it is important to be careful and smart about your financial decisions. Investing this way does come with its own set of risks, such as:
- Less control over investments
- Variable income
Long gone are the days where the only people who could invest in property are people who had property. Or money to buy property. Now, crowdfunding sites like these make it easy for first-time property buyers, millennials, and almost anyone else interested in pursuing property investment, to do so. Thanks to sites like these, you don’t have to have a lot of money to make a lot of money when it comes to property investing.
Have you used crowdfunding sites before to finance your property Investments? If so, what lessons have you learned, and which company is your favorite?