What is crowd real estate investing?

​For decades, huge institutional investors have kept a very profitable secret. They've enjoyed historical returns of 9.2%+ and less volatility than the stock market, by investing directly in direct, private real estate. (See "Why invest in direct real estate?")

 

For example, the heralded Yale Endowment (which has beaten the market for years) allocated a whopping 16% of their $20.8 billion portfolio to real estate in 2015.

 

Unfortunately, individual investors have been shut out of the party for years. Institutional investors have billions of dollars to safely diversify into hundreds of properties. Individuals might only afford one or two huge, undiversified investments. One failure implodes the entire portfolio, and is just too risky.

 

But this changed in 2013 with the JOBS act and the legalization of crowd investing real estate. Crowd investors pool their money into a single investment, which dramatically lowers the price of entry. Normally, a single apartment complex might cost a few million dollars. But in a crowdfunding investment, investors might only have to pay $5000 each.

 

This lower-cost, lets investors diversify over dozens or hundreds of investments. (See "How many properties do I need to diversify?") And this protects against the failure of one or two properties. So investing in real estate is much safer, and boosts returns.

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Other limitations

 

Like any investment, real estate crowdfunding has limitations. To learn what they are, please see: "6 limitations of real estate crowdfunding sites"