Challenges Involved With Crowdfunding Commercial Real Estate

1
Challenges Involved with Crowdfunding Commercial
Real Estate
2
Nowadays, there are several ways through which
investors can invest in commercial real estate
and the web also helps them in giving new ideas
for investing.
3
Crowdfunding is a relatively new phenomenon in
commercial real estate investment and is based on
the concept of collecting money from many small
investors.
4
In the commercial real estate sector, the concept
of crowdfunding has been used to help raise
significant capital to invest in all types of
property.
5
However, there are many challenges involved with
crowdfunding commercial real estate investment
and let us discuss about them.
6
Experience
7
The crowdfunding concept has to establish a long
track record of success which will certify that
it is a viable alternative form of real estate
investment.
8
As investors in the commercial real estate sector
are a bit wary about a new form of investment and
many investment methods take years to become
standard practice.
9
Quality control
10
One of the most significant challenge to the
success of crowdfunding is as it is a new method
there is no established controls or standards to
govern it.
11
Moreover, there is no denying the fact that it
has enjoyed some measure of success to date but
the reliability of the decisions taken under the
crowdfunding method is questionable.
12
Furthermore, there is no clarity in its working
process and what are the parameters upon which a
property is selected for investment.
13
Lack of risk-hedging
14
It is true that most investments cannot give
guarantees that they will pay off as per
expectation but with crowdfunding, the risk
increases manifold because the method is not
time-tested.
15
Moreover, due to this, you cannot get a good,
reliable advice and there will not be enough
evidence for most investors to rely upon.
16
However, as there will be many individual
investors, they can insure you against any risks
but this will cut down on your individual return
rate.
17
Regulations
18
The regulations passed in 2012 has legalized
equity crowdfunding where companies can raise a
considerable amount of money from investors who
have a net worth of at least 1 million or annual
income of 200,000.
19
However, despite this new regulation covering all
types of crowdfunding business, only about 3 of
people participate in crowdfunding.
20
Finally
21
The above-mentioned factors are some of the
challenges faced in commercial real estate
crowdfunding.
22
The concept of crowdfunding in commercial real
estate investment is facing challenges but it
will only keep growing in the future.
23
http//www.martinlandis.com/
https//twitter.com/_martinlandis
THANK YOU!