What is crowdfunding?

The crowdfunding it is used to finance different types of projects, among them birth of companies. It is an alternative if you are determined to be a Real Estate entrepreneur.
Crowdfunding types
There are 5 models, depending on the reward type that the participants receive in exchange of their participation in the project:

Donations: those who make contributions do not expect benefits in exchange.

From rewards: those who make contributions will receive a reward for their contribution.

From stock exchange: those who receive shares of it.

Loans or crowdlending: this is a mass financing though loans from a company in exchange for an interest rate for the money borrowed.

Royalty: when investing in a particular project or company and is expected to obtain a share, even if it is symbolic, of the benefits.

Crowdfunding as a growth opportunity

In the United States there are great projects with opportunities and benefits for your investors. Luxurious properties and large Real Estate assets such as hotels and shopping centers previously available to institutional investors now available to all thanks to collective financing. A group of thousands of investors makes it possible for everyone to own a portion of the property. Investing in New York or Miami is an excellent option for national and foreign investors who enjoy the return on their investment and a low level of risk.

Risks associated with collective financing

The risks of crowdfunding are due to less regulation of this market and the informality of some platforms. Lack of clarity in operations such as the selection of projects. The risk can mean losses for investors.

Liquidity risk: one of the parties involved has no money to asume the obligations.

Market risk: when the future values or cash flows of a financial instrument fluctuate due to changes in market prices.

Lack of coordination in regulation: the development of specific rules to regulate operations protects the uncredited investor and facilitates access to finance for small businesses.

Credit risk: when there is the possibility that one of the investors does not assume the obligations between the entrepreneur and the investor and the investor, the other party suffers a financial loss.

Operational risk: losses due to human errors and events outside the operation that may affect the result of the investment.

Solvency risk: due to the lack of information or communication between entrepreneurs and investors, there must be regulation that specify the information that must be shared.

Taking into consideration the types, risks and growth options associated with crowdfunding you can make a decision and act in the way that is convenient for your company or project.