The evolution of financial technology (fintech) has created new opportunities in the real estate investment field to enable those with venture capital, and viable real estate development projects, to collaborate seamlessly. There has always been a historical gap between those that had money, and those that needed it. It traditionally required extensive networking and ample marketing budgets to generate suitable investment opportunities on both sides of the deal-flow and financing equation. Online real estate investment technology has bridged this barrier.
How can you as a project representative, accredited investor, or real estate professional harness this technology to advance the strategic objectives of all stakeholders in the real estate economy? We’ll explore how online real estate investment technology can bring you more potential for growth in your real estate investment career.
Online Real Estate Investment and Reduced Risk for Accredited Investors
The driver behind the evolution of real estate investment technology is the appeal of the crowdfunding model. While crowd sourcing of funds for investment projects is centuries, and even millenniums old, the nature of the instant communications afforded by the development of the Internet has allowed more efficient collaboration between the various stakeholders involved in the real estate invest business.
Advancement of data collection, storage, and analysis technologies has equipped the industry to make more informed, quality decisions in less time. The global nature of digital communications technologies allows investment project leaders, accredited real estate investors, valuation professionals, and financiers to share and extrapolate sophisticated data sets to create the most refined and accurate financial projections possible at any point since the inception of finance.
Analytically advanced technology and instant, interregional communications capability creates an environment that reduces risk for all parties through superior data, and combined experience and fiscal power. Risk is among the key factors that influence all aspects of the investment business and financial decisions. One of the greatest benefits of crowdfunding for real estate investments is that stakeholders can distribute the risk across multiple contributors and properties in a broader portfolio of shared real estate investments.
Stable Returns Through Pooled Funding Opportunities
Investing in real estate investment projects through shared risk funding models allows more stable returns. By offering pre-vetted real estate investment projects that have passed through rigorous due diligence standards, pooled funding allows the accredited investor to be certain of the viability of proposed projects. Value add projects, that are acquired below market, and managed by credible and experienced project leaders offer the least risk and the highest profit margins, the benefits of which are passed directly to equity and debt investors.
Smaller contribution requirements allow you to spread your capital over multiple projects, further diminishing the overall risk profile of your portfolio. Inevitably, a small percentage of projects in any investment medium are bound to fail; however, with your investments allocated among several baskets, the investor stands to lose less if a borrower defaults, or markets collapse. If an investment does have a less than positive outcome, the team that administers the crowd funded investment will handle the recovery autonomously. Crowd sourced investments carry the additional advantage of minimal management responsibility, freeing the accredited investor to focus on identifying new opportunities.
Greater Access to Real Estate Investment Capital
For real estate entrepreneurs seeking access to significant amounts of capital to realize profitable development opportunities, online real estate investing technology provides an extremely well capitalized marketplace to source funds. Traditionally, the greatest challenge in real estate investment was raising the capital to fund projects; however, that has now shifted in the opposite direction: acquiring profitable opportunities has become the greater challenge, with capital readily available for viable proposals through the global network of real estate venture capital.
Regardless of the class of property you need to fund, or the scope of the project, there is capital available for ventures that are led by experienced and credible professionals. The cumulative experience of the online real estate investment platform’s team of dedicated and diligent investment and finance professionals provide the additional support to insure the solvency and long-term viability of sponsored projects. The crowdfunding marketplace has the additional benefit of stimulating competition among private money sources, thereby reducing the overall cost of capital, even for projects that would historically be deemed as representing greater risk, demanding an excessive cap rate.
Embracing Opportunities
The contemporary field of real estate investment has created new opportunities for all participants in the industry. While the array of options presented by the modern investment landscape can be overwhelming, working with reputable and experienced investment professionals will provide the guidance needed to identify and embrace qualified real estate investment opportunities and capital sources. The evolution of the real estate market and supporting technology promise a more diversified and safer investment environment.
