Real Estate & Crowdfunding – Know the Connection

Crowdfunding real estate is a fresh concept, that employs crowdfunding to generate capital for real estate investments. With this kind of real estate investing, investors can invest in a broad range of properties minus the hassle of coping with mortgage brokers, real estate agents or contractors. Rather, the crowdfunding platform will facilitate the routine tasks to assure the successful completion. This in turn, enables you to profit from the returns without running around to get things done.

An Interesting Read: Know How Crowdfunding Works

Advantages of Real Estate Crowdfunding

Real estate has laid the groundwork of wealth for centuries now. Let’s take a look at the advantages of this new formed concept :-


Engaging in real estate investment is highly convenient when integrated with crowdfunding. There was a time when private real estate investments were only accessible to the affluents with hefty capital and strong connections which helped in the availability of the investments. With modifications in the law and the expansion of online crowdfunding platforms, there are no hindrances in getting any access.

Territorial Diversity

As portfolio diversification is one of the greatest perks of real estate crowdfunding, another prominent perk is to attain geographic diversification along with your investments. Diversity in territories is essential as various regions of the real estate market can function differently from one another. For instance, real estate market in city A can be in good shape, it is possible that the market in city B can encounter an essential downturn. Like the old saying, never keep all your eggs in one basket, it is safe for you to invest in different locations. Therefore, while making real estate investments via crowdfunding, you will have the choice to select where to invest.

Passive Investment Vehicle

As opposed to more conventional real estate investment vehicles, like direct ownership, this one is a passive investment vehicle. For individuals into traditional investments, usually require to spend significant time catering to the property to ensure that it is established on time and in accordance with the provisions, and support all related risks as well. With crowdfunded real estate investments, you are investing with a third-party real estate operator who pertains to all that work. You are confiding in the operator to perform all the necessary work on time and in the given budget. This saves you from the from the nuisances of dealing with the property and gives you ample times to focus on your other investment ventures.

Negligible Investment Size

If you were not able to invest in real estate owning to the high amounts of money as with traditional real estate investment, crowdfunding offers you the opportunity to invest. Because of the small size investments, you can first test the ‘waters’, if you are keen on it, you can start small and diversify your portfolio with passing time and experience.

Process – How it Works

The notion behind crowdfunding is that when a developer or real estate professional attains an opportunity, they do not always have the capability to proceed with the project on their own hence they let individuals to assist in some of the capital to carry out the project.

Primarily, the sponsor determines an opportunity, arranges the procurement of property, and even takes the accountability of its management and consequent sale of the asset. The crowdfunding platform is where the sponsor gets the investors who are seeking to generate passive income from real estate. A Special Purpose Vehicle (SPV) is made to obtain the asset in which the investors are stakeholders.

There are two methods in which an investor can be a part of a crowdfunding opportunity. When you invest in an equity-based model, you attain returns in regard to the property rental income or gain a share of the property’s estimated worth in case it is already sold. Equity offers enhanced returns in comparison to debt investing. Debt-based funding is relatively popular as investors attain a fixed interest rate suitable to the amount which you have invested.

Read more : Malaysian Properties and its Investment Worth

Tips for Investing in Real Estate Crowdfunding

Investing in Uncertainty

Change being the only constant in today’s world, both opportunities and challenges come without a notice. It is essential to be vigilant while keeping composure. While we must be more careful, it is not necessary to invest less in uncertain times, rather it can be a great time to invest more.

Residential Property is Flexible

Property is wide, and disruptions in economy can have various effects on various sectors of property. Hotels and retail landlords are generally affected to a great extent. Although with reductions from central banks in interest rates, mortgages turn cheaper resulting in rise in the demand for residential property.

Labuan as a Hub for Real Estate Investment

Owing to its low property rates, Malaysian Ringgit (MYR) currency exchange and a plethora of options in properties to choose from – Malaysia and Labuan is an ideal hub for your real estate investments. Entrepreneurs that are keen on investing in real estate properties in both Malaysia and Labuan for the choice of buying from different kinds, ranging from condominiums to apartments or bungalows as well as commercial lots. Both Malaysia and Labuan’s distinctive characteristics make it ideal both for building the rented property for commercial or residential use, with an emphasis on short-term rentals for business people and tourists too. On a larger scale, investors with bigger appetite of investing in real estate globally, it is also ideal for them to set up a company in Labuan for real estate investment reasons and holding purposes as well. These structures are beneficial for tax reasons and offer ease in set up as they can be framed as required, in accordance to the selected investment purposes. For more information about Setting Up a Company in Labuan, get in touch with QX Trust team of consultants at CONTACT US or