"You do not have to consider any property management-fees!"
WHAT IS IT?
Online real estate platforms are a service where investors can connect with real estate developers. For this type of investment, it is possible to invest in a larger commercial or residential deal. This is also known as real estate crowdfunding where investors can contribute in real estate via online platforms. On the online platforms people are able to invest their capital what could be less than the capital necessary to purchase a property. It is therefore possible for investors to diversify their investments with not much money.
IF I AM THE INVESTOR, WHAT CAN I EXPECT?
There are some risks to this kind of investment. First of all, there are always bad actors on the markets. There is an assumption about the good behavior in the real estate market. However, this assumption is misleading and in the current day more a more fraudsters and misleading marketing is entering the industry, definitely online. Also, to be able to sell your shares you have to actively seek for buyers. Unlike the stock market these kinds of shares are known for their illiquidity. Last, you have zero to non-control over the project. This is indeed part of the type of investment. However, it is important to consider this before you are willing to invest quite some money.
BUT, the online real estate industry is known for their attractive ROIs and their low minimums. The crowdfunding campaigns guarantee some significant returns with interest rates in the double digits. Also, you do not have to consider any property management-fees. You do not have direct ownership of the property which means you do not have to invest your time in maintaining the property. Third, you are able to invest in not only one but multiple properties. Via this diversification it is possible to diversify your risk which leads to a more stable reward. Also, this diversification is possible geographically, investing in different markets around the country/globe.
Overall, investing in online real estate platforms gives the opportunity to invest in single projects or to create a portfolio of projects. This can cause geographic diversification in your investment. It is important to know that online real estate platforms have the tendency to be illiquid with lockup periods and have a certain amount of management fees.