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What are the pros and cons of real estate crowdfunding?

You may have heard about crowdfunding but are unsure what it is. Crowdfunding is a way that people use the internet to solicit money for a project. Common reasons people look to crowdfunding include help with medical bills, funds to manufacture an invention and financial backing for movies and other creative arts projects. However, some entrepreneurs in Florida are now turning to crowdfunding to back real estate investments.

According to the Dough Roller, crowdfunding for real estate can have benefits for both investors and developers. Investors can get involved in projects for a relatively small price. This makes it easy to diversify across different sizes and types of properties.

In addition, crowdfunded real estate investments can offer a high rate of return. However, they are also somewhat high risk and your investment is not guaranteed. Also, your investment may not guarantee that the project will raise enough capital to be completed. You may be faced with the choice of taking a loss or contributing additional capital beyond what you had planned for. Plus, some sites may have minimum standards when it comes to who is allowed to invest.

If you are a real estate developer, crowdfunding can be an attractive way to raise money for your project. Some investors may be interested in purchasing equity in your project, while others may choose to help finance your debt. Typically, the deals you would make with investors would involve lower interest rates than traditional lenders and better terms. This should not be considered legal advice and is provided only as general information on this topic.

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