As many real estate investors know, getting on the property ladder is no easy feat. Rising house prices combined with tighter lending criteria on mortgages have created obstacles for many would-be house buyers in recent years.
Also in recent years, property crowdfunding has been providing ways around such obstacles, particularly in the area of residential property investment. Such has been the growing popularity of crowdfunding as a vehicle for speculators that it is now becoming some investors’ sole route to climbing the property ladder and building a diverse portfolio in the process. The sector continues to expand across the globe, with new companies being launched all the time. Launched only six months ago, Indiana based Holdfolio is a new property crowdfunding start-up.
While many platforms tend to join with property developers in order to list properties that potential buyers can invest in, Holdfolio prefers to do things a little differently. Speaking to the Indianapolis Business Journal (IBJ), company co-founder Sterling White commented:
“We call for-rent signs hoping to find motivated sellers tired of ‘landlording‘. We also send letters to homeowners in desired neighborhoods to generate off-market leads.”
Once White and co-founder Jacob Blackett have secured a property, it is then refurbished and listed on the Holdfolio website, giving people the opportunity to make an investment. Listings are only available to accredited investors, which means several checks will be made into all potential buyers. Once approved, investments of $5,000 or more can be made for an equity stake in the property.
Returns are then generated in the form of rental income, twenty percent of which goes to Holdfolio, while the remaining 80 percent goes to investors after property tax and other expenses are deducted. The properties are sold after a five-year period, with Holdfolio predicting that investors will see an annual return of 18 to 23 percent.
While the state of Indiana allows crowdfunding platforms to target non-accredited investors, Holdfolio has no intention of going down that route for now, despite the higher fees that they could charge if they did so.