Property investment remains one of the sturdiest asset classes available, providing a fantastic way to make more from your savings. Whether you’re a seasoned investor or just getting started, you need to decide where best to place your capital. Let’s take a closer look at both direct investing and property crowdfunding, two of the most popular ways to begin developing a portfolio of valuable, profitable property investments.
Direct Property Investing
This is the name given to property investment which involves the purchase, management, rental and/or sale of a property for the purpose of profit. The term can pertain to the purchase of a property with the intent to gain rental income, or to develop the property with the hopes of selling it later for a higher price. Often direct property investment will pertain to buying a property for lower than its market value, before renovating or making key improvements which will bolster the end profit at resale.
Whatever means are used to make a profit, using the direct property investment model is dependent on cash flow. Without the capital to invest, you may require a bank loan or a mortgage.
You have probably heard of crowdfunding, the process of gathering capital through multiple sources – often in support of a special project. Property crowdfunding uses the same model and encourages multiple investors to contribute via their own investment.
Crowdfunding property investment has become increasingly popular during the last few years, providing new avenues for those who might otherwise feel locked out of the property market. There are a growing number of companies helping to make this method of investing far simpler. This is an appealing option not only for those without the capital to invest directly, but also for those eager to develop a diverse property portfolio without involvement in the day-to-day running of a property, such as maintenance, refurbishments and tenancy negotiations.
Direct Investing or Crowdfunding – which is for me?
Both methods have their pros and cons, but they can largely be boiled down to convenience and cost. Direct investment gives more control, but it also brings more responsibility and cost. Property crowdfunding meanwhile is great for those who want to invest at all levels, without the need to source a large deposit. Whilst some might be concerned about the newness of the industry, it is highly regulated and every bit as safe as investing via more established methods.