RealtyShares, a leading online marketplace for real estate investing, announced the results of their 2017 Real Estate Investing Survey on April 20th. The Harris Poll conducted this survey with 2,000 US adults in March 2017 on behalf of the popular real estate crowdfunding platform. The team’s finding show that Americans want to invest in real estate and they want the process to be simplified with technology.
That’s great news for the real estate crowdfunding industry, right?
The problem is that only “32% of Americans have heard of the term real estate crowdfunding” and “only 2% responded that they are very familiar with the term.” This means that one of the biggest battles currently being faced by the real estate crowdfunding industry is a lack of awareness. These platforms are currently providing Americans with a service that they want. The public just doesn’t know it yet.
This research also found that “40% of Americans aren’t sure what type of investment has performed best since 2000.” The answer to that question is real estate, which has been earning investors almost double the annual returns when compared to stocks. Unfortunately, a quarter of Americans wrongly believes that stocks are the best investment option.
Clearly, there are a few misconceptions about real estate investing that must be overcome if real estate crowdfunding platforms like RealtyShares are to become more mainstream.
“Real estate returns have kept pace with or even exceeded certain investment options in the past and, yet, 85 percent of Americans aren’t taking advantage of the opportunity to invest in this asset class,” said Nav Athwal, CEO of RealtyShares.
“Risks are inherent with all investments, so diversification is important for any investor’s portfolio. That the majority of Americans haven’t tapped into real estate can speak to the lack of access that has been inherent in the industry for a long time.”
Luckily, this report doesn’t only contain bad news. They found that overall, 48% of Americans would consider investing in real estate if there was technology that could make it easier. Millennials, adults ages 18 to 34, are even more eager to invest in this asset class with 68% saying that they would invest in real estate if technology made it easier.
“Residential real estate as an asset class is a $29 trillion market, and the commercial sector adds another $10 trillion,” continued Athwal.
“Over the last ten years, we’ve seen an application of technology to real estate to make it easier for homebuyers to research properties, and open up real estate investing to a much wider audience.
The next wave of tech companies, such as RealtyShares, has the potential to fundamentally alter the way in which we transact within this industry — making it easier for someone to raise capital, get a loan or efficiently put that capital to work as part of a larger investment portfolio.
Our vision is to continue closing the gap between the way people invest in the stock market and the real estate market.”
Real estate investing has been outdated for a while now. People are looking for more practical and accessible solutions for funding and investing in real estate. Real estate crowdfunding platforms are working to offer them a better solution.
For example, the Harris Poll found that approximately two-third of Americans believe that flipping a home is a good way to make money. Younger respondents were more likely to support a fix and flip, with 77% of respondents aged 35 to 44 supporting this idea compared to 60% of respondents who were 45+. RealtyShares makes it easy for experienced project sponsors to get funds for their fix and flip projects and manages payouts to investors, who earn monthly or quarterly returns.
The recent economic recession has people unsure about what investments are best, but the data shows that real estate is an asset class that is currently performing well in the US. Diversification is an important part of any investment portfolio, so investors who aren’t aware of the opportunities presented by the real estate crowdfunding industry should take the opportunity to find out more.
Top platforms like RealtyShares have very high standards for accepting projects, and therefore are able to maintain very low default rates. Since launching, RealtyShares has financed over 550 projects with the help of more than 92,000 registered investors and returned over $59.7 million of principal to their investors.
Check out my recent post on ways to get funding for a Fix and Flip to learn more about real estate investing.
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