Peer-to-peer (P2P) lending puts accredited investors in touch with approved real estate borrowers, cutting out the need for traditional lending institutions. Peer-to-peer lending gives control back to investors and borrowers, allowing both parties to pick and choose the opportunities and partners in which to invest their capital.
Crowdfunding vs. Peer to Peer Lending (P2P)
Peer-to-peer lending is different from crowdfunding, although they are both in the same family of marketplace lending. Crowdfunding projects are funded via donations or by other means of bartering, like the promise of a gift upon completion of the project or some other interesting perk. Often, with crowdfunding campaigns, incentives get bigger for higher donations. Peer-to-peer lending is a more traditional lending approach in that both parties agree on a fixed rate of return.
Direct Access to Real Estate Borrowers and Investors
The peer-to-peer marketplace is a platform through which real estate borrowers can seek capital directly from investors. In turn, it allows investors to choose a specific property or development opportunity instead of trusting their capital with an institution that will choose on their behalf. The new fundraising platform leverages technology to reduce transaction costs and make the process of acquiring capital and investing in real estate more efficient.
“At Sharestates, we offer investors direct access to real estate investments through our online marketplace – with net annualized returns between 10-20%.”
Lower Rates for Borrowers, Higher Returns for Real Estate Lenders
Direct access allows for property owners and developers to seek a loan with much lower rates, and it provides more attractive, solid returns for accredited investors. Cutting out the banks and financial institutions when seeking investment or funding opportunities is the best thing that’s happened in real estate development in a long time. And, with the ever expanding borders of the Internet, the pool of accredited investors and investment opportunities is bigger than ever.
Crowdfunding and peer-to-peer lending make it easier for anyone to diversify and expand their real estate portfolio, as well as gain access to capital for their real estate projects.
