Let’s discuss Real Estate Crowdfunding

[James Smith]

Let’s discuss the Pros and Cons about Real Estate Crowdfunding .

[Ian Ippolito]

Originally posted by @James Smith:

Let’s discuss the Pros and Cons about Real Estate Crowdfunding .

James, Crowdfunding is essentially an old-school syndication that is allowed to market online. So the pros and cons of crowdfunding are essentially the pros and cons of investing passively in a syndication.

The advantage is that once you choose the sponsor, you do not have any work to do. When you directly own real estate, it can be a full-time job.

Also, with syndications you can hire someone that has years more experience than you can ever hope to attain on your own. If you are new to real estate, this can save you from making very expensive mistakes. You can also instantly diversify into many investments across different geographies strategies, asset classes, portions of the capital stack, etc. and at a much lower cost than if you had to buy all the properties yourself on your own.

The disadvantage is that you give up control, and you have to be able to vet the sponsor. If you can't live with/do those things then it's not a good fit for you. The other thing is that if you are time rich and cash poor, you may be able to make a higher return by owning the real estate yourself and putting a lot of sweat equity, rather than paying someone else.