If you as an investor decide that the option of crowd funding is right for you as you are able to source the deals from the platform but are just not able to obtain the capital to fund those deals then this is an option that you may be able to pursue. When choosing which platform is right for you, you would need you to undertake your due diligence on the company, how they operate and source deals and how they thereafter undertake their sales process. In essence it can be seen as a positive and a negative that the success of this strategy is highly dependent on the success of your chosen crowdfunding platform you use rather than yourself.

 

This is why undertaking your due diligence and checks, and how they operate is even more so important. Make sure you review Companies House and ascertain whether they are making money or not making money.  You can see what type of people work on the platform and speak to people that work there to understand and ascertain how they operate. It is very similar to estate agency as you are not necessarily choosing the company because of the brand but you are choosing the company because of the people that work there and whom you feel comfortable with. When investing money you always need to ensure you invest it where you feel comfortable. It may be an idea to firstly invest what you consider to be a small amount of money and ascertain how the systems and operations work, how the people work and most importantly how you feel undertaking this strategy.

 

In terms of net returns with property crowd funding if you look at current platforms they tend to have exit strategies of 12 months and the returns per annum generally range between 7-12% however this is of course dependent on how much you invest into the project obtained through the platform. The more you invest into the project the higher your returns are likely to be. It is a great way to mitigate your risk as you are able to go in at a lower investment value. The returns to be fair are a lot lower than what you could achieve if you undertake the ventures yourself but the benefit of course is that you can decide how little or how much you wish to invest into the platform.

 

Additionally in terms of problems property investors could face with crowd funding in the future is that choice may be an issue as you are not able to invest in everything. At this present time there are companies and brands that are popping up everywhere which means that the market place may be becoming saturated. For instance there are hundreds of online estate agencies however we are probably only able to name five that are strong players within the market place that people know. As time goes on people will become more educated but also have more choice which means for us property investors it makes the due diligence more complex as you cannot research into every single company within the market place.

 

With all of this Property Tech or as it is known as “PropTech” is a new but exciting industry. It is indeed in its very early stages and it is not as heavily regulated at the moment. Therefore as investors you have to be even more careful and ensure that you undertake your due diligence.  If you look at the market place it can be safe to say that investors are now seeing this as a potential strategy for themselves. Whether it is right for you is entirely dependent on your circumstances and what you feel comfortable with.

 

Best of Luck!