Crowdfunding is still a relatively new concept, but its growing popularity ensures that it will be around for a long time. While Jason Hartman recognizes that crowdfunded real estate is still very much in development, he is quick to point out the importance of developing an understanding of up and coming tools for investment.
A quick tutorial on crowdfunding: an individual or group has an idea for a project and creates an audio-visual proposal to host on a crowdfunding platform (like Kickstarter). Individual donors contribute money to the project in exchange (usually) for a reward of the idea-generating party?s choosing. By investing in projects of their choosing, donators effectively regulate the quality of projects that are successful.
For the young investor, crowdfunding provides a valuable opportunity. Though some sites have rules against real estate investment projects, others are working toward these possibilities. And these sorts of projects (generally creative in nature) also provide valuable opportunities and lessons for young business people.
The Power of Presentation
In presenting a project to a crowd, it is essential that is appears professional, original, and visually interesting. Successful projects contain good writing, quality video, and great ideas. In the investment world, you?ll find all of these to be valuable assets.
Putting together a project for a crowdfunding site also forces an individual to put all of their ideas together in a cohesive and coherent way. It requires follow through?something a successful investor has no shortage of.
Return on Investment
Whether you?re hosting a crowdfunded project or donating to one, you?ll soon recognize the importance of return on investment. If you?re looking for funding, you?ll likely find that investors want a project that is well thought out and offers a unique product (whether tangible or intangible). They?ll also want a reward that reflects the amount of money they?ve given to the project. This generally is not a financial match, but one of perceived value. For example, a crowdfunded movie might offer a signed script in exchange for X amount of money.
A Diverse Portfolio
Jason Hartman emphasizes the importance of a diverse real estate portfolio, and this is your chance to practice! If you?re investing in crowdfunded projects, you?ll be doing a fair amount of research before you choose the project you?ll support. This familiarizes you with the pre-investment research you?ll do later in your career.
If you?re running a crowdfunding campaign, you?ll wind up investing plenty of your own time and money in your project?good practice for later in life. You?ll also learn to recognize your own limits?how much money are you willing to spend? How much time?
Crowdfunding is a great opportunity to experiment with different projects before you jump head first into a real estate investment. Or, consider it a creative accompaniment to your real estate project. Or, better still, allow crowdfunding to fund outside projects so that your personal income is focused on larger investments. Go out there and get Kick-started!?(photo credit: Haags Uitburo via photopin cc)
The Young Wealth Team