Crowdfunding vs real estate investment funds

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Thinking about investing in real estate? You’ve probably seen the phrase real estate investment funds (REIFs) come up during your research. We’re going to explain the difference between crowdfunding and REIFs so you can work out which option is best for you. 

Since the 1960s, real estate investment funds (REIFs) have offered investors a way to diversify their portfolios with property. While this option takes away the hassle of purchasing an individual property, it has plenty of drawbacks too. Crowdfunding is a newer way to invest in properties, and it’s a lot more accessible and affordable for most people. Here’s why you should consider crowdfunding over REIFs if you’re thinking about real estate investments. 

What are real estate investment funds (REIFs)?

A REIF is a pot of money that you and other investors can contribute to. The fund manager will then take your contributions and invest them into real estate investment trusts (REITs), which purchase real estate and other property-related assets such as shopping centres and hospitals. 

Any return on investment will generally come in the form of quarterly dividends or value appreciation. However, dividends can be paid less frequently, meaning they won’t give you a regular income. Property crowdfunding can offer a more stable annual income, particularly if you’re investing through a platform such as Bricksave, which will distribute rental returns among investors. 

What is real estate crowdfunding?

With crowdfunding, you invest through a platform to hold a stake in a property. This gives you greater control, as you decide which asset you are investing in rather than a fund manager. As opposed to REIFs, it is far more likely you will qualify for the investment as many platforms do not need to check your credit score.

For crowdfunding, investors usually access this type of investment through a platform which makes the process simple and free of complications. There are a variety of different platforms; some offer the possibility of lending money directly to a developer, while others, such as Bricksave, offer the opportunity to participate in the direct acquisition of a particular property to receive a rental income and the chance to make a profit once the property is sold. 

Investing in REIFs

If you don’t know anything about investing, the process of investing in a REIF is quite complex. First, you’ll need to find a suitable fund that is investing in your desired markets. Your chosen fund will then invest the money it receives from you and other investors into a property or real estate investment trusts (REITs). 

This strategy is more commonly chosen by institutional investors, like a pension or insurance companies, and your success will depend on the judgement of the fund manager. You’ll also have to pay ongoing fees with this kind of investment, including portfolio fees and property maintenance costs.

Investing in crowdfunding

Real estate crowdfunding offers a simple way to participate in the real estate market. However, the majority of crowdfunding platforms only focus on domestic markets and therefore an investor’s portfolio can be restricted. For example, if you’re looking to invest in the US market, you’ll need to find a US platform that allows international investors and you will likely need to be a high-net-worth individual (HNWI), bank or trust to get approval from the Securities and Exchange Commission (SEC). 

Luckily, there are new ways in which investors can become part of the real estate crowdfunding world. Using an investment platform like Bricksave allows you to assemble your own portfolio of truly diversified premium real estate in cities such as Miami, Vienna and Barcelona without any strict criteria or lengthy processes.

How Bricksave makes investing easy

Whether you’re looking to diversify an already healthy investment portfolio or want to make your first investment, we can make the process simple. Using our straightforward investment platform, you can hold a stake in properties across the globe and choose the ones that fit your return and security needs. 

Regardless of where you are in Latin America or the rest of the world, simply select your country, city and property of choice from any device connected to the internet. In return, you can expect a rental income and the opportunity to profit as soon as the property is sold at the end of your investment, usually within four years. 

At Bricksave, we offer a simple, affordable way to invest online in international property starting from $1,000. We’re upfront about fees and the process of investing is straightforward – read how it works and get started today.

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Bricksave Admin
Bricksave Team

September 02, 2020

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