I have read an article stating that a startup named Smart Crowd has begun Crowdfunding Real Estate in Dubai. Is Crowdfunding practice going to help Real Estate investors in Dubai? And which would be the best option, investing in REITs or in any Crowdfunded property? share your opinion!
If you are just starting out in RE investing, I would suggest beginning with REITs. REITs are less risky, more liquid, and tend to outperform private real estate investments. REITs are easy to purchase and sell since most trusts trade on public exchanges. REITs offer attractive risk-adjusted returns and generally produce a stable cash flow. They are stable long-term investments and are a good asset to have in your portfolio. Crowdfunding is still a great option if you see an asset with a lot of potential. Crowdfunding is a newer method of investing that raises money from a large group of investors through an online portal. Rather than having stock in various large properties through REITs, crowdfunding focuses on the purchasing of stock in a single entity. Crowdfunding is riskier than REIT but has the potential to generate higher earnings. Like REIT, crowdfunding allows you to dip your hand into real estate investment without having to put down large amounts of capital on a single asset.
While I believe REIT is a better choice for newer RE investors, crowdfunding still has a place in buying property. It has become increasingly popular throughout the years and is still a great way to generate the remaining capital needed to buy an asset. In the end, both investment options are attractive – it all depends on how much risk you wish to take.
From a historical context, investment performance and portfolio diversification benefits available from investing in REITs , REITs offer several advantages typically not found in companies across other industries. These benefits are part of the reason that REITs have become increasingly popular with investors over the past several decades.
As for me, investing in crowdfunded property is better. You can directly choose several small or big real estate projects to invest in. When I started my investing in real estate, I also had the same question. But I chose crowdfunding, because it gives more control and transparency and may be easier to track how the individual properties are performing. But with REIT you don’t know where your investment money will be spend.