By Sean Terry
While entrepreneurs have been using crowdfunding to finance a huge variety of projects for years it is really just now catching on in the real estate industry. So how can crowdfunding be used for wholesaling properties and why try it?
Even though millions of dollars have been raised with crowdfunding for everything from green supermarkets to reviving community buildings and even home purchases it is surprising how many real estate investors and Realtors are completely unaware of its existence and how it works. This is pretty shocking given the amount of attention it has received in the press recently. Fortunately it isn’t too late to leverage it.
As the term suggests crowd-funding essentially means raising money from the crowd (public or other investors) to fund a project. This provides another alternative source of capital for financing real estate deals and developments.
There are a number of different types of strategies which can be deployed here. Most property industry experts are already familiar with the concept of pooling money from other investors to fund a project and offering a return in exchange. However, other options here include giving up a piece of a new entity for buying, selling or holding property, or raising contributions without giving up any ownership or fixed rates of return.
Crowd funding can be used for wholesaling properties of all types from land and lots to commercial real estate projects in all sectors as well as houses and portfolios of rental homes or bulk sales of distressed properties.
There are many advantages of this type of financing for wholesaling properties. There are transactional lenders and commercial mortgage lenders which may offer access to short term cash for these purposes, however they still require paperwork, can slow down the process and their fees can dig into profits while putting increased pressure on investors. This alternative can be used for speed to grab better bargains and take down far larger parcels of land or multi-million dollar homes as well as entire portfolios which would otherwise be totally out of reach for the average solo investor or small investment group.
It can also be recommended for end buyers and investors too. This could help move properties faster and for a premium. The desire to scoop up masses of U.S. real estate is out there, yet access to credit remains the one real hurdle for most. This can help those on all ends to leap this obstacle with ease.
Sean Terry is a Real Estate Investing Mogul that hosts the #1 Real Estate Investing podcast in iTunes, if you would like more great information on Money Making in Real Estate please visit http://Flip2Freedom.com Today!
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