The Democratization of Real Estate Investing
If all of this seems like a foreign language to you, don’t stress. There are plenty of books and online resources that can give you the knowledge you need to get started. The important thing to keep in mind is you don’t have to compete with the big boys and girls, just use stealth strategies and with time and experience, you’ll create a system that works for you.
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After REITs were introduced in 1960, broader individual participation in commercial real estate became somewhat more accessible; but most REITs operate as holders of pools of assets, and it has remained difficult for smaller investors to participate in syndications of individual projects.Sponsors of specific real estate projects have continued to seek financing from larger investment groups partly to avoid having to deal with individualized reports and inquiries from large numbers of investors. Only recently has communications technology and its facilitation of crowdfunding enabled smaller investors to participate more broadly in specific real estate investments. The internet has made possible wide access to news, information, products – and real estate investments. Through online platforms like Realty Mogul , people can now review real estate investment projects at their convenience say, sitting with their laptop or tablet at the kitchen table at 10pm, after the kids have been put to bed.Previously, introductions to these opportunities might have required specially arranged meetings with attorneys, bankers or financial advisers that is, if the person had such connections at all.The ability of smaller investors to conveniently access deal flow directly has enabled vast numbers of run-of-the-mill investors to invest in larger or higher-level real estate projects than ever before. Just as such opportunities had been generally more difficult to access, they were also often still limited to institutions or persons of very substantial wealth.A project syndicator seeking $2 million in equity wouldnt typically concern himself with contributions of $10,000 or $20,000; rather, he would search for investors able to contribute ten times those amounts, in order to simplify his task of managing investor updates and distributions during the life of the project.Technology, however, has enabled large numbers of unrelated investors to pool their contributions and make a significant investment through a single legal entity keeping things easy for syndicators while broadening the source of potential investors. The illiquidity of property management companies in baltimore most real estate investments has also contributed to investors often receiving only infrequent reports on a projects status.
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Real Estate Investing With Cash? Why You Should Reconsider
That can make it harder to get the money you need from a lender. Consequently, some folks are making the decision to just use their own money to invest in real estate. While this sounds like a good solution on the surface, there are a number of reasons why it is not. OPM First, the best investors try to neveruse their own money. Youve probably heard the acronym OPM, which stands for Other Peoples Money. Thats not a joke.
For the original version including any supplementary images or video, visit http://www.forbes.com/sites/zillow/2013/08/01/real-estate-investing-with-cash-why-you-should-reconsider/