It is only recently that investing together in real estate has become so popular. It was estimated that by the end of 2014, investors injected $1 billion in to the US property market with a further projection to end 2015 with an estimated $2.5 billion.
All of this came about with the introduction of the new JOBS Act (Jumpstart Our Business Startups Act), a law intended to encourage funding of S small businesses in the United States by easing various securities regulations. The new rules allow accredited investors to invest in investments that fall under the Act (and in 2015, new rules were introduced allowing non-accredited investors to invest, opening up the market to an even wider variety of investors).
Investing together allows accredited investors to invest a relatively small amount of money in large projects with a great estimated ROI. This really changes the market as it makes it easier for property entrepreneurs / contractors to raise capital from non-institutional sources. It also lets investors benefit from a market that was not available to them until recently.
How does it work?
There are several platforms available for you to choose from. Assuming you are an accredited investor, you sign up for the platform, validate your accreditation, and then you can pick a project from a list of open projects while matching your appetite for risk and returns. On some platforms, you also get to choose the type of security you commit your money to, either debt or equity. For those that prefer taking less risk, the latter is “safer,” as debt investors are repaid before equity investors. On the other hand, and unlike equity investors, the interest is usually lower, whereas if the deal exceeds expectations, there is no participation in the profit upside.
How do you pick a platform?
As noted above, there are several platforms; all are open to a variety of investors who can invest in a variety of real estate projects.
So how do you pick a platform? Our rule of thumb is that, just like with any other forms of investment, do some research. The beauty of these investing together platforms is that, to a certain degree, they remove a lot of hassle associated with property investments. Investing in real estate comes with its risks. We are aware of the potential high and lows of the sector, and we know that you know this too. However, it is all about controlling and minimizing your risks as much as possible.
First and foremost, we suggest looking at the people behind the platform. Who are the founders and what is their background? Do they come from the world of real estate? What is their experience in fund raising? In finance? What is their reputation? This is essential for the fund’s ability to secure projects and to raise funds, as well as for its longevity.
Next, look for the elements that are embedded in the deal structure. What are the project securities? Can the fund take over if the project goes south? What is the estimated ROI? How much information are you given about the risks associated with the particular project you are about to invest in?
In addition, make sure you also look for additional traits, like transparency and customer service. How much information is given to you? Can you ask additional questions? Can you discuss the deal with other interested investors? Don’t be shy about asking the right questions. You might be getting the best service even prior to investing, but make sure that you also know what you are getting into after you have invested your money in a project.
iintoo is such a platform. The people behind it are well-known for their professionalism and proven track record in real estate investments and finance. Our team knows how to maximize profit while managing risk and avoiding pitfalls. Transparency is critical to us, and we like to share with you everything we know about real estate investment. Through the platform, you are able to meet, follow and discuss with the best property investors. You can also build your property portfolio, gain knowledge and improve your investment expertise at your own pace.
Want to know more? Join us today!