Investing in buy-to-let property is still a top investment choice for thousands across the UK – but more millennials are now discovering the benefits of property crowdfunding as an alternative way of entering the real estate sector.
Property investment brings in monthly rental yields as well as capital gains on sale for the investor. However, from the outset, buying a property in full requires large amounts of money, often the necessity of a mortgage, as well as the taxes and other regulations that need to be taken into consideration when investing in buy-to-let.
While investors undoubtedly stand to make more money through this form of investment – particularly when considering the option of buying off-plan property and investing in build-to-rent – property crowdfunding has created an increasingly popular way for people to dabble in property investment without having to stump up the same levels of cash. Some crowdfunding platforms offer the opportunity to invest from as little as £20.
Millennials are active investors
According to one property crowdfunder, UOWN, more than half of people (54%) who invest in this way are millennials, aged 18-30. The number of crowdfunding investors depletes with age, with 25% aged 31-45, 15% aged 46-60, and just 6% aged 60 or over.
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Part of the reason for this, aside from the obvious financial ones in that millennials are likely to have less disposable cash to invest in property, is that it offers a stepping stone for those who are interested in property investment, and for technology-savvy youngsters it is an obvious choice.
UOWN director Shaan Ahmed said: “A lot of people will be surprised that millennials are so active in investing, but young people continue to break stereotypes around finances and savings.
“More than any other age group, young people are seeking out alternative investments, and property crowdfunding is a simple way for them to reap the financial rewards of a property portfolio.
“For digital natives, the idea of using a property crowdfunding website just makes sense – you can see all the financials, select your properties and even invest using your debit card or by direct debit. The whole process takes one or two minutes.”
Taking away the burden of homeownership
Jatin Ondhia, CEO of Shojin Property Partners, also thinks that crowdfunding is a way of removing the regulatory burden that comes with property investment, while the fact investors can normally sell their stake and release their money at any time means it is a great way for people to save up for a deposit on their first home further into the future.
Ondhia added: “Unlike earlier generations, many young people don’t want to be bogged down by a mortgage so early in their lives.
“Today, people of all ages and socio-economic backgrounds can invest in the buy-to-let via crowdfunding platforms to generate both income and capital growth. This way of investing in rental property offers a hands-off investment and the opportunity to spread risk.”