It’s no secret that investing in real estate is one of the best financial decisions you’ll make in life, and there are many reasons why this is true. With real estate investment, you have the luxury of numerous potential avenues of returns. For instance, you can choose to lease the property you own as an additional stream of income or sell it for a higher fee when its value increases.
The homeownership rate in the U.S was 65.8 percent in 2020, a 0.7 percent increase from the previous year and a 2 percent increase compared to the 2015 statistics. That’s not all. As of the second quarter of 2021, the average home sale price in the U.S. is $374,000, a 16.7 percent increase from the previous year.
Buying real estate helps to diversify your investment portfolio beyond the stock market, and signing up with an online real estate investing platform is one of the best ways to achieve this. Like any other investment, real estate isn’t one without risks. Therefore, you have to ensure you’re well informed before you employ the services of trusted online real estate investing companies.
We have witnessed a surge in online real estate investing in recent times, leading many to wonder what the fuss is all about. In this article, we’ll be providing answers to the most frequently asked questions about online real estate investing.
1. What Are Online Real Estate Investing Companies?
Online real estate investing companies or platforms serve as middlemen between real estate developers and investors. These platforms provide you access to profitable real estate deals. You can choose to acquire a property on your own or join a crowdfunding project using online real estate platforms.
There are many online real estate investing companies hoping to render you their service. However, not all of these platforms cann be trusted. It’s therefore important for you to conduct diligent research before committing to an investment project.
2. What Is Real Estate Crowdfunding?
In simple terms, real estate crowdfunding allows different people to fund a real estate investment online. Crowdfunding projects are a way of encouraging people who desire to invest in real estate but don’t have enough money. However, you may need to meet some criteria before you can be allowed to join a crowdfunding scheme.
In real estate crowdfunding, investment platforms allow you to contribute a small amount of money with other registered investors to fund a larger project.
Unlike in the past when lucrative deals were only available to the wealthy, crowdfunding allows people to own some shares in a real estate investment for a minimum fee while making good returns. You’ll need to pay the required fee over a timespan.
Did you know that North America represents about 40 percent of the global crowdfunding market? Crowdfunding continues to gain momentum in the real estate market. The global market is expected to hit $114 billion by the end of 2021, a 26 percent increase since 2019.
3. How Do I Use an Online Real Estate Investing Platform?
It all depends on the platform you choose to use. Generally, you’ll need to create an investor’s account by filling out important details, like your full name, phone number, residency, and the amount you wish to invest.
Do you wish to become a part of an ever-increasing community of real estate investors? Learn how to start investing in real estate by signing up for free.
4. What Is the Minimum Investment You Can Make?
Like the above question, this also depends on the platform. However, the minimum investment for Holdfolio is only $20,000.
5. What Are the Risks Associated With Online Real Estate Investing?
As with any other investment, there are known and unknown risks that come with online real estate investing. Every industry has it’s good and bad days tied with market shifts, inflation, interest rates, or other economic factors. There are also unforeseen risks like natural disasters and world crises that can affect the value of your assets.
In truth, it may be difficult for investors or investing companies to control these risks, but you can hedge against these uncertainties by diversifying your portfolio.
6. What Is an Accredited Investor?
An accredited investor is a financially buoyant individual or company that can buy securities that aren’t registered with regulatory agencies, like the U.S. Securities and Exchange Commission. Entities that fall under this category include banks, brokers, and high-net-worth individuals or companies.
7. Are Only Accredited Investors Allowed to Invest?
Each company has its own guiding principles on who can participate in their investment scheme. Some crowdfunding platforms like Holdfolio work with both accredited and non-accredited investors. However, non-accredited investors will need to meet certain requirements before they can invest.
8. What Is a Return on Investment?
Return on Investment (ROI) is a financial metric used to calculate how profitable an investment will be under normal financial circumstances. It is usually measured in percentage (%). For instance, a 10 percent return on investment will mean that you earn a 10 percent profit of whatever amount you put into the investment.
This performance measure helps you to decide your most preferable real estate investment. A higher return on investment ultimately means a higher profit.
9. Who Determines My Return on Investment?
Unlike many other investments, determining your ROI when you invest in real estate can be quite complicated. The reason is because there are some factors like interest and utility rates, maintenance costs, and property taxes that can impact your ROI. These variables may be difficult to predict.
At Holdfolio, we aim to deliver double digit overall returns to our partners (10 percent or more per year). We are able to achieve this thanks to our financial projections which we base on our expertise and educated assumptions.
Visit our page for more questions about Holdfolio.
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Are you looking to invest in real estate online? Holdfolio is the right platform for you. Our goal is to enhance the lives of our partners and colleagues by creating innovations and providing profitable partnerships through real estate investing.