Commercial real estate (CRE) is yet to see popularization among individual investors. With institutional financiers and entities pooling the investment funds prior to the ‘80s, it comes as no shock that CRE is still unknown for many investors. However, it has managed to gain evident growth during the ‘80s and ‘90s even though in small margins.
While bonds and equities remain to dictate the portfolios, several corporate investors have developed a more open niche for CRE assets in the recent past. Nevertheless, with US investors controlling over 17% of domestic investments, the numbers are still flat for individual investors portfolio share.
That said, what does crowdfund offer to commercial real estate? Read on to find out.
What Does Crowdfunding Bring To Individual Investors?
The delegates did the ABC’s for the development of CRE investments in 2012 as they passed the JOBS Act (Jumpstart Our Business Startups). The JOBS Act revoked the provisions set by the Securities Act of 1933 which restricted the sales of securities and shares to the general public.
According to the new laws, now the companies including CRE platforms can sell their shares and market their opportunities freely with any authorized financiers. These advancements in crowdfunding have enabled individual investors to spend their money on commercial real estates with promising returns.
Under the JOBS Act, any investors with a net worth of $1 million or $200,000 as annual income can invest in crowdfunding platforms. Furthermore, nowadays the CRE-centric crowdfunding companies help individuals to make investments as little as $5000. It opens the door of opportunities to the entrepreneurs in real estate.
REITs And CRE Assets
What is a REIT? Real Estate Investment Trusts are companies that operate like stocks. They list investment properties on the exchange where the individual investors can buy shares like in stocks. There are plenty of good REITs to invest on, though, their approach is different when compared CRE assets that allow direct investments.
In shorts, CRE assets are more suitable for passive investors. REITs, on the other hand, operates like a stock exchange and can cause concerns for an average investor.
Ease Of Decision Making
Long-term profitability is the fundamental motive in any investments. Investors look for informed data before they take the decision. In that case, the CREs data integration platforms host all the necessary information to aid the investors in finding the most suitable deals.
Crowdfunding companies nowadays offer real-time CRE market data with strong return possibilities. It comes as an advantage since this data was kept away from the investors by large brokerage firms. With crowdfunding in commercial real estate, the realtors now have the power to access the information to help their decision making.
Crowdfunding has lowered the barrier to make investments in commercial real estate properties. With their clarity in operations and direct investment facilities, the realtors can now invest in non-residential businesses with low expenses as little as $5000. Now individual investors have a chance to expand their business through CRE.