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Finance Technology

Crowdfunding – An Investment Tool To Spread Wings In The Commercial Real Estate Sector


One of the major concerns in the commercial real estate sector earlier was its high capital requirement. It was often like bringing large sums of cash or qualifying for a home loan to start your investment in the commercial real estate sector. However, all this was set aside as in the year 2012, the laws opened up opportunities for others to invest and participate in commercial developments by introducing and permitting crowdfunding activities in India. So what exactly is crowdfunding in commercial real estate and how has it opened up the commercial real estate to the other? We will discuss this further in the article.

Crowdfunding In Commercial Real Estate

Crowdfunding: Meaning, Types, and Benefits

The traditional method of real estate investment consisted of only a handful of wealthy investors purchasing commercial buildings. On the other hand, real estate crowdfunding is an investment technique whereby a large pool of investors join hands for developing a particular real estate project and a crowdfunded effort generally consists of few dozens to a thousand investors being involved in the same project. Investors in a crowdfunding model invest in small proportions and receive proportional equity on the project. The small investors are limited and usually don’t take part in the voting activities to take decisions on the property.

Real estate crowdfunding is a new concept and thus isn’t very popular among investors. However, with it spreading its wings, the industry is expected to witness an overall change and newer opportunities shall arise. Crowdfunding is not only beneficial as it destroys the ‘high capital’ entry barrier, but it also helps in diversifying your investment portfolio and thus helps in mitigating risk.

If you are interested in commercial property investments and looking for an ideal partner, Assetmonk offers you some of the top quality commercial real estate investment opportunities in top Indian cities such as Bangalore, Chennai, and Hyderabad. Assetmonk offers commercial investment opportunities using the crowdfunding model and thus the investors need not worry about the high capital requirements of the industry.

Crowdfunding Vs Traditional Investment

Syndicate investing – Crowdfunding

The introduction of commercial crowdfunding has changed the way the investment process is carried out lately. The commercial real estate projects value at least five or six figures and if anybody wanted to have equity in the same, they were to reach out to the seller directly and create a deal. This was often difficult and created an entry barrier as most of the investing population did not possess large sums available with them.

With the introduction of crowdfunding, anybody can invest in commercial opportunities with some thousands at hand. Now the investors can invest with small sums and slowly build their investment portfolio over time as the profits start rolling in. Thus now commercial investments are not about who brings the highest capital. It is all about choosing a trustworthy and reliable crowdfunding partner to join hands with to invest in commercial opportunities with a promising future.

Choosing An Ideal Investment Partner For Commercial Opportunities

Is it your first time investing in commercial real estate with crowdfunding partners? Then here are some of the important facts you should know before jumping into the commercial scene as getting started on the right foot is crucial to make progress with your investments and to attain huge success in the future.

  • Research is a very important and crucial factor when it comes to real estate investment.
  • You must look into the risk and reward spectrum of each of the investment options available to you.
  • Risk is not something that can be completely done away with within the investment arena, however, it can be reduced to a great extent by choosing the right investment opportunity.
  • Thus the major goals of investors in a real estate investment are to undertake little risk and to create maximum profit. 

This is exactly where crowdfunding proves its worth again. By investing through crowdfunding, you are not any longer confining all your money into just one investment. Since investments through crowdfunding can be done with smaller capitals, you are now able to spread your money into several other investment options and thus mitigate risk to a large extent. Unlike the earlier times when there was just a single investor in a commercial project who bore all the risk, crowdfunding emphasizes shared risk as multiple other investors are also part of the investment.

Some of the most important questions you should ask yourself while evaluating your potential to undertake risk includes:

  • What is your risk tolerance?
  • How much can you invest without putting yourself at risk financially?

Always remember that real estate crowdfunding is not a short-term goal and that you cannot expect high returns immediately. When selecting the ideal investment partner, make sure you ask them about the turnaround time for dividends and how long your money should stay in the fund. You may also talk to your financial advisors to determine a financial and investment strategy. After doing so, you may evaluate the different investment opportunities provided and start your investment to build your wealth. Assetmonk offers a crowdfunding opportunity with an IRR of 8-24% based on the product you chose to invest in.

What Are The Benefits Of Commercial Real Estate Investments?

Commercial Real Estate Investing: Crowdfunding

Investing in commercial real estate through crowdfunding is a good option as:

  • It ensures good cash flow in the form of passive income
  • It reduces the high structure fee and the difficulty in maintaining your property by grating your profit.
  • Anticipated Return on Investment (ROI)
  • Tangibility

Summing up, you must know when to invest and how to invest. It is advised that you don’t jump to conclusions quickly and conduct your research set. Look for any defect in the property you chose to invest in and also check the reviews of the past clients of your crowdfunding partner. Every situation is unique thus utmost caution while investing should be employed. Getting yourself a reliable investment partner like Assetmonk can help you settle your investment concerns to a certain extent.  

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