Hello. My name is Yuri Mosha. I moved to America 7 years ago. During this time I managed to create several successful projects, sell them for a good price and create new ones. I am constantly studying the market and am looking for the most marginal and easily scalable projects. A few years ago, I started investing in real estate using a crowdfunding system, and created a company that deals with consulting, investing and selecting development objects for investment. To a greater extent, my investment fund is focused on the Florida market. There are several reasons for this.
First, the real estate market in the USA for the last five years shows a steady growth. In Florida, he is one of the most visible.
Secondly, the legislation of this state has to invest in real estate. Property tax is two percent.
My main goal is to give Eastern Europeans access to the growing US real estate market.
Let’s start with the basics. What is crowdfunding real estate investment?
In the past, private real estate investments were available only to a very narrow stratum of the US population. To participate in such projects, it was necessary to meet one of two criteria:
Or show a steady income above TWO-THOUSAND THOUSANDS of dollars
Or have a company with an annual turnover of at least ONE MILLION dollars.
Such criteria, to be honest, can only meet the huge institutional investors. And only these investors had access to projects with stable average growth in the long term and with less volatility, for example, than the stock market
Everything changed after changes in investment legislation by non-professional investors. Previously, individuals, without special education, could participate only in the IPO. In 2012, Barack Obama made a proposal to soften the rules for more investors to enter the market.
Due to changes in the area of seed investments, there have been changes in the real estate market. Real estate crowdfunding has changed all that. This allowed individual investors to pool their money with other investors and participate in the shared co-financing of projects.
The possibility of investing in smaller amounts attracted more players, and made this industry safer. Now investors can reduce risk by diversifying into hundreds of properties in different cities of America. They can also expand the portfolio of types of objects of investment, avoiding the investment of all funds in one or two objects. Also, another significant advantage of real estate equity investment is actually the complete lack of control by investors. The main thing to focus on is the choice of the management company and monitoring its work. This type of investment is completely passive and does not require additional attention, except to the managing company-developer.
Why do I focus attention here? Because the payment of property tax has not been canceled. So, if the new object does not make a profit, then you will only incur expenses. The tax varies from state to state, but on average it is about two percent. If you understand that the management company is incompetent, then sound the alarm. Convene all shareholders and select a new management company.
I propose to consider a positive option – when the management company knows its business. Then every year you have from 6 to 10 percent of the return on investment and the increase in the value of the share by at least 4 percent a year. This is real in the USA. After the real estate crisis in 2008, no one expected such a rapid recovery of this market. But in America, we see only positive trends, for example, in comparison with Europe.
I’ll tell you a little about the mechanics and essence of crowdfunding.
In general, the idea of crowdfunding, which literally means “funding the crowd”, appeared in the early nineties, when fans of one musical group decided to raise money for a tour of their idols in the US using a specially created online campaign. Since then, crowdfunding has been used extensively for a variety of purposes, be it financing political campaigns and start-ups or charitable support to those in need. The crowdfunding development boom for making profit from joint investments came in 2015, when investors actively used crowded platforms to invest in residential and commercial properties.
Now three years have passed and the excitement has decreased, stability and transparency of investments have appeared.
The idea of crowdfunding in real estate is an opportunity for people with an average income to invest from THOUSANDS of dollars and more into commercial properties, where only millionaires could have invested before. Now everyone can buy a share in a hotel in Hawaii, or in a residential complex in Miami on the first line.
How it works.
For example, you have twenty thousand dollars of deposited funds. With this money you can probably buy even an apartment, but in the area where you definitely need to leave money for a gun. It is clear that you want to live in a posh area, overlooking the park and a good school for children.
Instead of investing in your house in a bad area, you can invest your money with ten other investors and buy a shared property in the purse. For such purposes, a separate company is usually opened, all shareholders become its founders and own shares in the amount of their contributions. This company buys the object itself, hires the management company and that’s it.
Investment options are through an online crowdfunding platform or through an investment fund. Both options have their pros and cons. For example, on platforms, you can simply select the object of interest to you, look at the already selected management company and do everything through online without leaving your computer. The great advantage of platforms is that you will very quickly become a shareholder. Platforms at the speed of light close deals, as thousands and thousands of participants are involved. This differs significantly from investment funds whose coverage is slightly less. A significant disadvantage of the platforms are the conditions for participation. For example, they can work only with American citizens, or only with companies and no individuals at all.
Therefore, funds are sometimes more convenient. They will show you individually the objects, help you choose the optimal conditions, communicate with the seller’s brokers for you, and, if necessary, will open a company for you, invest in you on the platform or directly into the object, and yes, they can help you invest only with a passport.
Talk a little about the most popular platforms
The pioneer of the crowdfunding market in the United States and one of the most famous platforms is the Fundrise platform, specializing in real estate in New York and Washington. In 2014, the company was valued at $ 77.5 million. More than 41 thousand investors are registered on the platform. The minimum investment is $ 5 thousand.
Another giant of American crowdfunding is Realty Mogul, which was founded in 2013. The company has more than 300 facilities in California and Florida, with a total value of more than $ 700 million. From Fundrise, the Realty Mogul platform is more transparent infrastructure and more detailed information on past and current projects. The minimum investment, as in Fundrise, is $ 5 thousand.
The third leader of crowdfunding platforms in the United States is the Prodigy Network company, which was launched in Colombia, but now deals mainly with Manhattan real estate. During its existence, the company has attracted investments of more than $ 300 million. The Prodigy Network differs from other US market leaders with a higher cost of a minimum share – $ 20 thousand for US citizens and $ 100 thousand for foreign investors.
As you can see, the platforms are constantly attracting funds, you can invest in different states and projects, in commercial real estate and in residential development.
If you do not want to bother yourself, but you just want to invest money and start receiving dividends, you can use the service of an investment consultant. He will select and issue everything for 2-5 percent of the investment value.
The decision is yours. Get a hotel in the states and come to us for advice.