It is true that there are various ways to invest in commercial real estate and one such method that is, crowdfunding is getting more attention lately. Crowdfunding is a process where several small investors come together to invest in a commercial property. Most of the investors are of the view that crowdfunding is an easy way to invest in the commercial real estate sector. However, there are certain challenges inherent to the crowdfunding strategy. Go through the slide to know more about the challenges involved with crowdfunding commercial real estate.

1. Challenges Involved withCrowdfunding Commercial Real Estate

2. Nowadays, there are several ways
through which investors can invest
in commercial real estate and the
web also helps them in giving
new ideas for investing.

3. Crowdfunding is a relatively new
phenomenon in commercial real
estate investment and is based on
the concept of collecting money
from many small investors.

4. In the commercial real estate
sector, the concept of
crowdfunding has been used to
help raise significant capital to
invest in all types of property.

5. However, there are many
challenges involved with
crowdfunding commercial real
estate investment and let us
discuss about them.

6. Experience

7. The crowdfunding concept has
to establish a long track record
of success which will certify that
it is a viable alternative form of
real estate investment.

8. As investors in the commercial
real estate sector are a bit wary
about a new form of investment
and many investment methods
take years to become standard
practice.

9. Quality control

10. One of the most significant
challenge to the success of
crowdfunding is as it is a new
method there is no established
controls or standards to govern it.

11. Moreover, there is no denying the
fact that it has enjoyed some
measure of success to date but
the reliability of the decisions
taken under the crowdfunding
method is questionable.

12. Furthermore, there is no clarity in
its working process and what are
the parameters upon which a
property is selected for
investment.

13. Lack of risk-hedging

14. It is true that most investments
cannot give guarantees that they
will pay off as per expectation but
with crowdfunding, the risk
increases manifold because the
method is not time-tested.

15. Moreover, due to this, you cannot
get a good, reliable advice and
there will not be enough evidence
for most investors to rely upon.

16. However, as there will be many
individual investors, they can
insure you against any risks but
this will cut down on your
individual return rate.

17. Regulations

18. The regulations passed in 2012
has legalized equity
crowdfunding where companies
can raise a considerable amount
of money from investors who
have a net worth of at least $1
million or annual income of
$200,000.

19. However, despite this new
regulation covering all types of
crowdfunding business, only
about 3% of people participate in
crowdfunding.

20. Finally

21. The above-mentioned factors are
some of the challenges faced in
commercial real estate
crowdfunding.

22. The concept of crowdfunding in
commercial real estate investment
is facing challenges but it will
only keep growing in the future.

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