Every organisation, whether big or small, requires funds. The purpose can be different though as small companies need funds to plant a seed. While big companies may need capital as they want to water and harvest their fields. So the point being can crowdfunding work for the Real Estate companies too?
Real estate is one such business or market that requires the investments and flow of capitals more than any other organisation. The needs of small companies can be obvious that they need it to start a new project.
There is a thing about new projects in the real estate world that it requires more capital to start a project than the funds required for the whole project. Hence, the real estate companies that are not well backed by the investors have to manage the fundings through banks and other financial institutions.
Finance is not only a concern for the small real estate companies but also the for the big names in the business. Real estate giants have an adequate amount of capital to kickstart a project. However, in a period the need for funds arise to cover additional costs and get the project going.
These costs may not be huge to cover but due to the million of dollars invested in the commencement of the project there faced with a shortage of capital. The scenario worsens if the prime investors in the company and the people rich enough to make investments of thousands of millions of dollars refuse to invest further in a project.Banks and financial institutes do not show interest in investing in covering the additional costs because the amount is not very high. Usually it is $ 5 million or less.
Crowdfunding can prove to be a boon for this problem. Crowdfunding is generally done through the internet, and a large number of people can get involved to fund an idea, an organisation or a company. The more the number of investors, the more is the capital accumulation that the companies can use for expansion or completion of the project.
Real estate is an arena that has not been explored in terms of crowdfunding. Crowdfunding in real estate is no doubt a healthy option. Companies can raise funds from the general public at digital platform through the internet and utilize the funds to fulfill their necessities.
From the point of view of an investor, crowdfunding gives a chance to be associated with a big company by investing a small amount and reap benefits.
Crowdfunders can form cartels and decide which company is offering better returns to their investment. Funders can do intensive background checks before investing in small companies. Online research is a great option to start with. One of the pros of investing in a Reputed company is that more than the money their image and esteem is at stake. Hence, they will not engage in a counterfeit deal.
Real Estate Crowdfunding: http://www.fundrageous.com/