The Covid-19 pandemic has fueled demand in owning second homes. Finding the right strategic investors is a critical feature of Real Estate crowdfunding. These deals can quickly become very complex, especially with other models of structuring deals such as Real Estate syndication.
The main reason for people opting for crowdfunding is that it reduces the amount of upfront capital required while still enabling investors to generate gains in the Real Estate market. Individuals are identified through friends, family, brokers, or partners or the newly formed crowdfunding platforms. Real Estate crowdfunding involves a group of individuals who pool their capital together to purchase Real Estate.
In fact, REITs are expected to create a $19.65 billion opportunity in India. This is a growing market with more companies expected to list as REITs in the upcoming years and investors become more educated about REITs and feel confident of generating stable returns with REIT investment. But REITs in India were only introduced in 2007 and currently there are only 3 listed REITs. REITs have been an old and popular concept in the US. REITs are also a stable investment option with dividends, interest payouts, and exposure to the Real Estate market, which is usually less volatile than equity markets. With REITs, your investment is spread out over a portfolio of Real Estate properties, be it commercial, residential, or any other type. However, unlike investing in individual Real Estate companies which are highly volatile, REITs are a low-risk investment option as there are a number of stringent guidelines to follow to become eligible to list a REIT. They are stock-market listed investments allowing investors exposure to the Real Estate market without having to purchase or manage the properties.
REITs are the Real Estate version of mutual funds. Real Estate Investment Trust (REIT) Shares The Indian Real Estate industry has also advanced significantly over the last several years to accommodate for alternate Real Estate investment options. It is important to note, however, that the industry has undergone significant regulatory changes making it easier and more user-friendly for individuals to invest in Real Estate. The primary reasons for this are the lack of knowledge in this industry and the inability to manage this Asset class remotely. With the advent of technology, greater knowledge, and penetration of financial Asset classes such as mutual funds and fixed deposits, this allocation is likely to change over time with lesser dependence on Real Estate.Īlthough the dependence on the Real Estate sector for an average individual, this industry has typically not been leveraged enough as a source of passive income. A 2017 survey conducted by RBI indicated that the average Indian household holds 84% of their wealth in Real Estate and other physical goods, 11% in gold, and 5% in financial Assets. Currently, a majority of individuals have not determined the ideal diversification strategy which is alarming, according to the RBI (Reserve Bank of India). However, the wealthiest people in the world have built their fortunes by investing enough time and money in growing their passive income streams.Įxamples of passive income investment are mutual funds, fixed deposits, Real Estate, gold, cryptocurrency, and other emerging financial Asset classes. With regards to financial Wealth, most people focus only on growing their active income, which is money earned from your job. In the limited lifetime that we have, we are trying to achieve multiple things such as leaving a legacy, finding love, identifying our life purpose, but most importantly maximizing Wealth for the financial wellbeing of not only us but for generations to come. This is one resource we are guaranteed to have only a finite amount of. Time is the most precious resource we have.