If you’re an active real estate investor, you’re probably familiar with investing through real estate investment trusts (REITs). These sell shares in a group of real estate investments similar to mutual funds. Many investors prefer these to outright real estate ownership because their investments are more diversified. However, the two biggest drawbacks are all of the fees charged to manage the trusts and the fact that investors have no say in what real estate is purchased by the trust.
Today, a new investment model is emerging in the form of crowdfunding. The crowdfunding concept is for people to pool their money together for a specific project. The concept has been around for a few years but is just now gaining momentum for real estate investing. Pooling funds enables investors to invest in bigger properties than they otherwise could or would want to as individual investors. Typical projects include properties with existing cash flow, such as apartment buildings, office buildings, retail shopping centers, self-storage facilities, and pools of single-family homes.
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