How To Use Real Estate Crowdfunding As A Source Of Passive Income
Imagine this: You live in a villa on the Mediterranean, spending your days lounging by the pool, sipping good wine, reading books, pursuing your hobbies and generally just living the good life. Now imagine you could live like this and still receive a steady income replenishing your bank account regularly without you having to lift a finger. By investing in real estate crowdfunding, you can generate a stable stream of monthly passive income to your bank account.
This is known as passive income, which is money earned with minimal activity through a variety of ventures which require little daily effort or upkeep on the individual’s part.
This sort of investing is also known as income investing. The primary consideration for an income-focused investment strategy is its ability to keep up with inflation. Ideally, you want to be able to draw only the income (or interest) from your investments without having to sell shares or property, thus preserving your capital base. So ideally when managing these assets, you need to create income streams that outperform inflation, as well as generate capital growth. In Europe, this usually means that if you have investments that deliver 7-8% returns per annum, you should be covered against inflation.
Of course, there are many ways you can generate passive income, and in this article, we will be looking at one of them – using real estate crowdfunding as a means to generate passive income.
What is real estate crowdfunding?
Until the rise of the crowdfunding model, real estate investment was mostly reserved for institutional investors or those who were already wealthy and could afford to buy or develop multiple properties. While the man on the street could usually afford a single property on a mortgage, investing in major real estate developments remained a pipe dream.
Real estate crowdfunding allows multiple investors to pool their money together to invest in properties and projects bigger than they could afford or manage on their own.
Investors generally visit an online marketplace and browse opportunities that vary by investment type, geography, and target returns. Once they have selected an investment that aligns with their goals, their funds are pooled with other investors, and the investment is closed.
The market for P2P crowdfunding is massive, and it keeps growing. According to statistics site P2PMarketData, in April 2019 the European market alone was worth a whopping €342m.
How to generate passive income?
Using the real estate crowdfunding model to generate passive income takes some initial work, but by choosing the right platform to handle your investments, you can eventually automate almost every aspect of the process.
Take a look at our practical guide on how to start investing to see how easy it is to start your portfolio.
The interesting bit comes when you start using a system like EstateGuru’s Auto Invest feature. This allows you to do a once-off setup, choosing how you want to invest your money. You can choose how much to invest in each project, which criteria a project needs to meet for your money to be allocated to it, and many other things like the Loan To Value ratio and loan type.
Once you’ve set this up you can essentially sit back and let your investments work on their own. You’ll receive regular updates and statements on your account and can withdraw your profits or capital at any time, except where loans are still open.
This means that, if you invest enough money, you can soon find yourself in the position where you’re making money every month without having to lift a finger – realising the dream of having your own source of passive income.
Of course, the more money you put back into your portfolio, the better your returns.
Soon you could be living the dream of receiving regular passive income. How you use it is up to you. Whether you want to retire early or have a dream of travelling the world for a year or two, creating a reliable, automated income stream can make it come true much sooner.
EstateGuru’s investments start from as little as €50 and there are no fees for investors. Sign up today and begin securing your future – estateguru.co
All investments, including real estate, are speculative in nature and involve substantial risk of loss. We encourage our investors to invest carefully. We also encourage investors to get personal advice from a professional investment advisor and to make independent investigations before acting on information that we publish.