3 things to look for in a real estate crowdfunding platform
Published by Scott Picken on Apr 20th, 2015
Whether it’s tracking steps for a workout or booking a flight online, we’re all aware that technology has connected us more than ever. However, the “Information Age” has changed a lot more than our fitness routines and travel plans — it has transformed how we see the world. Through the invention of online investment tools such as crowdfunding, technology has significantly impacted how we interact — both with each other and with our money.
Recently, the international real estate market, in particular, has been revolutionized by the advent of crowdfunding, which has brought new life to the industry’s formerly outdated investment practices. Each day, more and more real estate investors are turning toward crowdfunding to conduct their transactions.
In fact, real estate crowdfunding, especially global investment, is the fastest-growing segment of crowdfunding, having expanded over 156 percent through 2013-2014. With the total size of the real estate crowdfunding market now at over $11 trillion, the growth of platforms is radically changing the rules of the real estate game as we’ve known it. Online platforms are leveling the international playing field by opening the floodgates to market information and giving minor league and rookie investors a shot at the big leagues safely.
However, it’s important to stress that not all crowdfunding portals are created equal. Although most are very secure and credible, some platforms can provide inaccurate or dishonest investment information due to either their lack of experience or integrity. And as more real estate investors jump on the crowdfunding bandwagon, it is imperative to know which platforms to pursue, and which to avoid. In order to weed out the bad from the good, you should know exactly what a legitimate real estate platform looks like by fully understanding how one should operate.
Before you make a decision about which real estate crowdfunding platform is best for you, here are three important elements a good platform should provide:
1. Accurate and up-to-date information on the market and investment opportunities
If you want to see your investments thrive and grow, it’s crucial to gather the most current information about your targeted markets. Real estate platforms should provide constant access to expert information, allowing you to acclimatize to the market’s natural ebb and flow as needed. With a credible platform, you should have access to firsthand data on current market trends to keep you continually updated on your property’s status and the market’s current climate. Put simply, the right platform should place you in the right market and connect you to the right information so you can locate and choose quality international real estate properties to invest in, while partnering with the best local partners.
Your platform should also allow you to plan strategically better before making any investment decisions by providing you all the resources necessary to do proper and extensive research. This way, you can prepare to take on any unforeseen situations or market instability. Unfortunately, most people who invest in international properties lose their initial investments because of inaccurate or incomplete information. But as long as you do your homework, it’s easy to dodge the bad properties or partners. An excellent real estate platform should help investors maximize profit by ensuring they know about investment prospects and are aware of the current market trends. In order to succeed, you have to have the right information and the right partners.
2. Convenient access to vast opportunity
In our always-connected world, we are no longer bound by countries, currencies and economies, and, as a result, it’s now less about where you live and more about where your wealth lives. By blurring the lines between investors and capital, international real estate crowdfunding platforms have the potential to unleash unlimited wealth opportunities that have since been submerged beneath language barriers, time zones and cultural differences.
Global real estate can open many doors for investors to increase their financial wealth through widening exposure to a larger array of markets. And by broadening the overall reach of capital formation, real estate crowdfunding platforms can provide issuers and investors a much-needed source to meet the demands of today’s globalized economy.
That being said, your platform should be able to connect you easily with every opportunity the international real estate market poses by granting you access to an entire network of investors and investment options. Ideally, a real estate platform should also substantially simplify the investment process with a responsive, online support system and an efficient, user-friendly interface.
Platforms should ultimately provide a “one-stop” personalized service for you, fusing the convenience of the Internet to the investment process and acting as your go-to source for any real estate information and communication. Remember, buying a property is only one-third of the transaction. Tax, structuring and compliance make up another third, and the ongoing maintenance and managing of the transaction comprises the remaining third. This is why you need to make sure the platform and partners you are working with provide you with a real “end-to-end” solution.
3. Thorough background checks on potential investments and partners
Above all else, a legitimate crowdfunding platform should hail your safety as its chief concern by providing various security measures, such as comprehensive background and security checks. Essentially, an honest platform centers on bringing safety to an investment opportunity.
For example, before choosing another investor to go in on a property with, a platform should offer you ample resources to make sure you align with partners who are legitimate and well-versed on the global real estate landscape. When transacting in the international market, it’s incredibly important that you choose partners who have a strong global presence and understand each country’s set of real estate guidelines and nuances. By providing you access to company track records and successful global deals, platforms should help make sure you select an established partner who’s it for the long haul. And since time is critical to real estate investment and sound partnerships are pivotal, your platform should keep you up to speed on your potential partners.
At the end of the day, the appeal of real estate crowdfunding platforms lies in their ability to welcome a wider spectrum of players to the game. And as long as you know what the rules are, you’ll find a well-equipped crowdfunding team in no time. So don’t let fear of foul play keep you from your next big win — get informed, suit up and step up to the plate. After all, who wants to watch everyone hit home runs from the bench?
Scott Picken is the CEO and founder of Wealth Migrate, the premier global real estate investment marketplace. Scott has more than 16 years of international real estate industry experience, and Wealth Migrate’s leadership team has been a part of $1.34 billion in real estate transactions worldwide.