specified period of time . This ties up your money and makes it difficult or impossible to cash out at a moment ’ s notice in the case of an emergency .
Passive Real Estate Investment or Stocks ? Which is the Better Investment ?
With real estate crowdfunding , groups of investors combine their money to purchase commercial properties , apartment complexes , and singlefamily home portfolios .
Crowdfunding
Another type of passive real estate investing is crowdfunding . With real estate crowdfunding , groups of investors combine their money to purchase commercial properties , apartment complexes , and singlefamily home portfolios . These are mostly managed and executed through online platforms where investors are able to view progress and send payments .
Crowdfunding is very popular because it is so easy and does not require a large investment . Neighborhood Ventures is a Phoenixbased real estate crowdfunding company . Their projects are usually funded in a matter of days . They buy old apartment buildings , renovate them and then rent them to tenants . They take on projects in their own neighborhoods in an attempt to keep their investment dollars local and improve the communities where they live and work . Investors can very easily and quickly create an online account , upload their funds – as little as $ 1,000 , choose a project , and watch their money grow .
Crowdfunding is another very handsoff investment . Since there are so many crowdfunding companies that are very transparent in the properties they will be purchasing , you do have the ability to choose a project in a real estate market with the potential for large returns . With a company like Neighborhood Ventures , you would be investing in the Phoenix Metro area , which is one of the hottest real estate markets in the country , seeing doubledigit returns each year .
Many real estate crowd funders do require holding your money for a
Deciding between real estate or stock investments is a personal choice that depends on your financial situation , risk tolerance , and goals . You can make money two ways with stocks : value appreciation as the company ’ s stock increases and dividends . Your returns are based on stock market activity as well as the company ’ s earning .
Real estate has proven to bring in higher returns in a shorter period of time in most major real estate markets . According to the S & P 500 Index , the average return on investment in the U . S . real estate market is 10.6 %. Comparatively , the average annual return for the S & P Index over the past 20 years is only 8.6 %. Real estate also tends to be less volatile than the stock market . REITs and crowdfunding reduce the risk further since you are able to enter into the investment for little money out of pocket .
Overall , real estate and stocks both present risks and rewards . There is no right way to invest and people have seen both huge returns as well as huge losses by investing with each .
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