Have you been looking to invest in real estate but have not had enough capital. Now there is an opportunity for small savers via E-Money I continue to explore investments outside the stock exchange!
Me and Mrs. Good Finance have talked many times about investing in real estate. It feels like a fairly safe investment and at the same time good diversification into a stock portfolio.
We have both calculated and looked at suitable real estate objects to invest in. However, we have never come further than that. There are some reasons why we have never started our plans to invest in real estate. Firstly, a large start-up capital (several million) is often required for the down payment for a rental property with several apartments.
Secondly, prices are so high nowadays that the direct return on a rental house is not at particularly interesting levels (at least in our immediate area). Something that is also easy to forget is that you have to run your rental business as a company. This means that the profits go to your company and in order for you to get money in your pocket you have to pay it out as salary which means that a large part goes to taxes and other fees.
An alternative to buying rental properties to gain exposure to the property market is to invest in real estate shares on the stock exchange. However, it may not be quite the same as owning a property or being part of a real estate project.
What does E-Money do?
E-Money is a crowdfunding platform for those who want to invest your capital directly in real estate and property development projects. Here, as an investor, by joining forces with others, you can invest in projects you believe in and at the same time get a good return on your capital. What you really do is lend money to the property developers who then repay the money plus accrued interest after a set time.
Getting started is easy. All you have to do is register an account. Starting an account is free of charge and is what is required for you to invest in the real estate projects that are on the platform.
E-Money is really “just” a platform that connects real estate developers who need money with investors who want to lend their money.
The property developers can come to E-Money with a building project and request financing. Then E-Money puts the project out on its platform and you as an investor can choose to lend your money to the property developer. There is always a detailed description of the project, the risks that exist, the associated documents, the project’s duration, questionnaires etc.
E-Money as an investment
I see E-Money as a very good opportunity to invest in real estate and real estate projects. The expected return is 9-13% which is high. This also means that the risk is relatively high. In my opinion, this is a good diversification of the portfolio, but I would not recommend investing 100% of your capital with E-Money.
One advantage of such an investment (which is usually a loan to the real estate developer) is that you have no fluctuations in your invested capital. If you deposit USD 50,000, you can expect to have USD 55,000 a year later with a 10% return. This can be an advantage over the medium-term investment exchange.
So far, all projects made via E-Money have been repaid, but there is the risk that some project may not succeed in the future and you may lose your money (as with most other investments). Since the risk is relatively high, it is also good to invest in several different projects to spread the risk. The minimum bet is usually USD 50,000, which is quite high. Sometimes there are exceptions, I myself have invested in a project where the minimum amount was USD 30,000 but it is most common with USD 50,000 as a minimum.