If you are here, you have probably heard of crowdfunding in the past and are wondering how to use it to make profits. As technology spreads its wings in the Indian market, we can very well expect new and better investment options much often.
While not a traditional model, real estate crowdfunding is still a very powerful and effective option for income generation. As crowdfunding in India is gaining popularity, here is a guide that will cover all the aspects, making you an expert from a beginner.
What is Real Estate Crowdfunding?
In crowdfunding, a business owner collects funds from people (crowds) to raise capital for high-end CRE projects and investments. As the crowdfunding process is exclusively based online, you can only crowdfund a project through an investment platform.
An American investment idea, crowdfunding is widely being accepted in India as a convenient alternative to the traditional investment options for several reasons.
Benefits of Real Estate Crowdfunding
Whether you are just beginning your investment journey, or you are an experienced investor, locking in large amounts of money might put you in a dilemma. It can also be a very risky start for a new investor and so crowdfunding becomes a reliable option. It is also being seen as a reliable investment option due to several other reasons notable
- From a builder’s point of view, crowdfunding allows owners to maintain their complete autonomy on the project, otherwise in the traditional CRE investment model; a manager has to share the property and management plan with other investors or companies.
- Crowdfunding increases funding options and also expands investor networks.
- Successful projects will create a lot of publicity.
- Investors purchasing shares through crowdfunding platforms can earn CRE grade returns with comparatively lower investments.
- Crowdfunding offers an easy way of earning high returns and accessing your assets without bothering about the day-to-day hassles that come with ownership of a property.
- It also allows property builders or small business owners to collect capital for investment in the project without applying for loans or approaching bigger investors.
- User-friendly platforms
Dealing with real estate and property can be complicated for a new investor, we suggest that you approach an investment platform that has a history of happy investors. Assetmonk is a WealthTech platform that focuses on real estate investments. As they have a team of investment experts appointed specifically to answer customer queries and manage their investment, investing through this platform is a piece of cake.
Types of crowdfunding
Basically, there are three basic types of crowdfunding
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1. Equity Crowdfunding
Equity crowdfunding is one of the most widely used types of crowdfunding. It allows contributors to become part owners of the company; they do so by trading capital for equity shares of the company.
2. Reward-based crowdfunding
When individuals contribute to a business, typically in exchange for the monetary contribution, they are rewarded with goods and services.
3. Donation-based crowdfunding
It is a way of sourcing money where the contributors are requested to make donations and they expect nothing in return. Usually contributing to social causes such as natural calamities, disaster relief etc.
How crowdfunding works in India
Crowdfunding platforms usually start with listing a project that they require help raising money for, mostly all you have to do is specify your goal and promote the project.
As we know already, crowdfunding is the process of funding a project or venture by raising money from the contributions of many people via the internet. Crowdfunding in India, for passive income generation crowdfunding, has two major applications.
1. Crowdfunding for real estate
This is the gathering of funds for funding CRE projects or high-grade institutional real estate ventures.
2. Crowdfunding for Startups in India and Business Ventures
As India is gradually becoming the hub of startups and new business ventures, project owners and managers are also turning to crowdfund as an ideal way of raising funds. You as an investor can invest in your projects and ventures to generate great returns.
A Reliable real estate crowdfunding platform in India
In India, crowdfunding platforms offer a hybrid model for their crowdfunding investments. As real estate crowdfunding is an emerging form of passive investment and income generation in India, platforms like Assetmonk have taken the lead.
Assetmonk is a leading crowdfunding platform in India. As a WealthTech platform that focuses on real estate investments in the form of fractional ownership and crowdfunding, the company aims at democratizing CRE investments by opening institutional-grade properties for individual investors as well.
Based in Hyderabad, Assetmonk specializes in real estate properties of Bangalore, Hyderabad, and Chennai.
- Very low minimum investment required 0 10 Lakh.
- It opens institutional-grade investments properties at low investment prices and high returns.
- Promises annual IRR – 14-21%.
- They perform detailed due diligence of a prospective investment to minimize risks of investment.
- They also offer a real-time investment tracker, an interactive dashboard feature and full-time investment management support.
Is Real estate Crowdfunding a Good Investment?
Before the JOBS act of 2012, individual investors were not permitted to invest in CRE properties and projects. This was because the government feared that malicious real estate developers would take advantage of such individuals as they couldn’t perform a proper due diligence procedure.
With crowdfunding platforms that promise to perform due diligence and background checks of builders on their behalf, the CRE investment has become both reliable and profitable for individual investors. The growing demand and supply of commercial real estate properties have made the system flourish.