I’m a big fan of joint ventures.
When Ed and I were starting out in our property investing journey, we partnered up with other investors several times in order to leverage our investing dollars.
Our problem was, we had great serviceability, but few spare dollars to use as property deposits. So, we connected with other investors who had enough equity or cash to fund a deposit, but they didn’t have the borrowing capacity to gain mortgage approval and acquire their next asset.
They were great partnerships while they lasted, and provided all parties with the opportunity to get ahead in the property game.
Now, with advances in digital technology, there are more ways than ever to partner up with other joint venture partners – including the increasingly popular concept of crowdfunding.
Crowdfunding involves raising funds for a defined purpose from a ‘crowd’ of individual investors. It’s been around for years in creative and philanthropic industries, but more recently the concept has been gaining traction with property investors.
According to this article by Smart Property Investor, there are a number of companies in Australia that give investors a platform to invest with the crowd, including CrowdfundUP, BrickX and VentureCrowd Property.
I’m not sure how I feel about these. As a general rule, I’m not a fan of following the crowd. latvia If the masses are flooding towards a hotspot, for instance, that’s a huge red flag for me to run in the other direction!
But on the other hand, this does offer investors with smaller budgets the opportunity to leverage their money. As I’ve always said, it’s better to own a percentage of something rather than 100% of nothing.
Over to you: would you invest in a crowd-funded property asset? Or do the risks of a multi-owner joint venture like this far outweigh the rewards in your view?
Til next time, happy investing!