Real estate crowdfunding looks appealing, but you're not sure about how it works or its merits...
At first glance, it looks difficult, but since it's an unexpectedly simple mechanism, anyone can start right away.
There are many advantages in crowdfunding, so if you are interested, please start by all means.
In this section, we will introduce the mechanism, attractiveness, and points to consider when investing in real estate crowdfunding.

What is crowdfunding and what is its appeal?

The way Real estate crowdfunding is set up makes it difficult to know how much profit will be made.
This section explains the mechanism and the profits that can be earned

What is crowdfunding

Real estate crowdfunding gathers investments in real estate from multiple investors and distributes any profits earned to all.
When you own real estate, rent revenue comes from the tenants of the property.
In addition, if a property is sold, selling costs are incurred, but the costs are shared with investors and profits are shared

Real Estate Crowd Funding Structure

Real estate crowdfunding begins with collecting multiple investors on the Internet.
When multiple investors gather, they operate real estate based on their investments.
After the process, the rental income of the property or the profit from the sale will be obtained, and the profit will be distributed to the investors.

The Attractiveness of Real Estate Crowd Funding

Real estate crowdfunding is attractive because you can start with an investment amount as small as 10000 yen.
If you were to cover all the costs of buying a property yourself, you would have to raise a lot of money.
However, crowdfunding can keep down its own expenses in order to have multiple investors invest in it.
Because it is a small investment, it has great appeal because anyone can start.

What are the benefits and appeals of real estate crowdfunding?

A number of benefits can be gained from real estate crowdfunding.
You can decide whether or not to conduct crowdfunding depending on the merits, so you should know what the merits are.
Here we introduce the four advantages of real estate crowdfunding.

Ease of investing

Real estate crowdfunding has the advantage of being easy to invest in.
In the case of investments in physical real estate, there are many written contracts in terms of rental management and sales contracts.
Because of the time required, it may take time to start investing.
Real estate crowdfunding can be easily processed on the Internet.
The management of the property can be outsourced to a real estate management company so it is easy to start investing.
After the contract, you only have to wait for revenue to start generating.

Has stable dividends

Real estate crowdfunding has the advantage of stable dividends.
Investments may have high or low dividends because their prices fluctuate depending on the circumstances at the time.
When dividends are high, there are many profits, which is an advantage.
When dividends are low, however, they are a disadvantage because dividends are low.
Since rental income is the main source of real estate income, dividends do not fluctuate depending on daily price conditions.
However, there will eventually be a time when we will sell the real estate.
Since the sales price fluctuates greatly depending on the land price and the value of the building at that time, it is important to carefully determine the timing of the sale.

Have higher yields

Real estate crowdfunding also has the advantage of high yields.
Yield is the ratio of return to the amount invested.
The higher the yield, the greater the return than the amount invested, so it is possible to increase profits.
Typical real estate crowdfunds yields 3% to 8%, which is higher than other investment vehicles.
It is possible to earn a solid profit while keeping down the initial investment amount.

Able to examine property information in advance

Real estate crowdfunding allows you to review and confirm real estate information before making an investment decision.
Social lending (or Peer to Peer lending) is similar to real estate crowdfunding.
Both have the common point of gaining profits from investments, but social lending does not confirm real estate information prior to investment.
Real estate crowdfunding provides information about the age and area of the real estate you invest in, so you can start investing after you have examined the information.
We also know the address of the property, so if we find a property with a high land value, it will be advantageous at the time of the sale of the property.

What are the points to be noted in real estate crowdfunding?

Real estate crowdfunding is an attractive investment method in which you can start small.
Anyone can start with ease, but there are certain things that you should be aware of when you start.
We will explain what to look out for below.

May be a property with a low asset value

In real estate crowdfunding, we select investment targets from various real estate.
As previously mentioned, we can investigate real estate information in advance, so we can expect high profits if we select the properties that are most likely to be of value.
However, some of the real estate that can be chosen may be of low value.
Crowd funding may include real estate that has failed to qualify for real estate financing.
One of the screening criteria for financing is the high asset value of buildings, so real estate with low asset values failing in the screening process may go to crowdfunding.
Although you can start with a small investment, a low asset value can be a major hurt when you sell it.
We may not be able to generate expected revenues, so we need to be careful when selecting properties.

Risk of bankruptcy of fund operators

Even if we start crowdfunding smoothly, fund operators may go bankrupt during the investment.
It is important to note that Crowd funding does not purchase or own real estate.
Ownership of real estate lies with the fund operator and it allows us to make investments and distribute profits without purchasing them.
If an entrepreneur with ownership goes bankrupt, there is a risk of loss of principal or loss of investment.
While it is very difficult to determine the possibility of bankruptcy, we recommend finding a reliable fund operator after confirming capital, business scale, and other factors.

Unsuitable for those who want high returns

When investing, there will be many people who want to earn as high a profit as possible.
Rather than high earnings, real estate crowdfunding can be expected to generate stable earnings.
When making investments to purchase real estate, a leverage effect can also be expected.
Leveraging is a method of obtaining loans from banks to add to their own funds, thus having a large amount to invest with.
This method can provide high profits, but real estate crowdfunding is unlikely to have a leverage effect.
For this reason, crowdfunding has the appeal of being able to generate stable earnings and curb risk.

In Conclusion

Real estate crowdfunding is an easy investment method that enables investors to gather on the Internet and invest in investment properties.
Investment amounts may start from as little as 10000 yen, and we can also expect stable earnings after the investment.
There is the disadvantage of not being able to expect high profits, but because it is low risk, it can be said to be optimal for those who want to avoid risk.
Beginner investors, or those who want to start investing easily, may want to try real estate crowdfunding.