In our previous article we described how the online property investment process works. We introduced John and his path into property crowdinvesting. His investment was successful because he made the right decision and invested on the right platform. What is the “right” platform and how to make this key decision?
Here are the key indicators of the state of online property investment world:
- Worldwide, there are around 250 property crowdfunding platforms
- The industry is booming. In 2016 the online property investment market was worth more than 3.4 billion EUR. By 2025 the industry is predicted to grow to 300 billion EUR. That’s a growth of 88 times within less than a decade!
- The industry is still highly developing. The first platforms were established in the USA in the 2012.
- There is no standardised property crowdfunding platform model. The main differentiators are the investment strategy, mix of property types, and the management team.
- For the longterm success of the platform, the quality of the management team is crucial. The real estate experience is crucial for a sustainable investment strategy of the platform. In some cases, these platforms are run by purely tech “Silicon Valley” style companies who only happened to enter the real estate space.
- The second model are platforms run by experienced real estate professionals who have harnessed technology to start new businesses and expand their customer bases.
John did not underestimate the process of finding the right platform. He spent lot of time making his own due diligence to find the best ideal platforms. He focused on the following priorities:
- Platforms history and clients experience
- Management team experience
- Property type
- Investment risk analysis
- Platform history
- Number of finished deals
- Regional diversification
- Liquidity and secondary trading
- Yield on the investment
The biggest obstacle for John was that he could not rely on one source of information. He needed to rely on multiple resources as he researched blogs, review sites and finance advisor platforms.
In our next articles we will focus on the following steps which John has done:
2. How to choose the right deal
3. What are the key risks and issue of liquidity
4. How to diversify and what is the investment asset