Crowdfunding real estate investment in Australia

Crowdfunding a real estate purchase is an unusual practice in Australia, but it could help investors get into the market faster.

We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!

In the real estate world, crowdfunding allows investors to buy a share of a property or development project. Entering the property market is expensive, but it gets easier if you divide the purchase costs (and eventual profits) among a larger group of crowdfund investors.

The way investors make money depends on the type of investment. For some investments, such as a residential house or unit, investors could share the rent the property generates. For other investments, such as a large-scale property development, profit comes with the eventual sale price of the property.

How does crowdfunding differ from regular real estate investment?

Crowdfunding a property investment has a few potential benefits over traditional investing (buying a property yourself and renting it out while hoping the value grows).

Lower entry costs

The main draw of crowdfunding for real estate investment is that it lowers the barrier into the market for would-be property investors. Buying a property yourself means saving a deposit of up to 20% of a property's price. It means borrowing hundreds of thousands of dollars through an investor mortgage and paying tens of thousands of dollars in stamp duty.

Crowdfunding allows these costs to be spread among a broad base of investors. It likewise allows these investors to share in the returns. While it may seem like an uphill battle to come up with, for example, $580,000 to purchase an investment property, crowdfunding means that 580 individuals could invest $1,000 each and then share in the rental returns or the profit generated by the sale of the property.

Buy into bigger real estate developments

Real estate crowdfunding also allows everyday investors to access projects at a scale that would be otherwise impossible. Crowdfunding platforms in Australia have offered stakes in large-scale commercial properties and huge residential developments along with traditional, single family, owner-occupied properties.

These large projects are usually off-limits to the individual investor.

Lower returns but lower risk

An investor in a crowdfunded property does not have their name on the property’s title or on an associated mortgage, meaning their credit history isn’t impacted should the investment take a turn for the worse. Moreover, with the ability to trade or sell stakes in an investment at any time, investors aren’t tied to properties long-term.

Is crowdfunded property investing for me?

If you’re looking to get involved in property investment but don’t have the means to save a deposit for a home loan (or simply don’t want the long-term commitment), crowdfunding could be a good alternative. However, it’s important to keep in mind that with a smaller investment you won’t see the same level of returns you could with traditional property investment.

Getting involved in crowdfunded real estate projects can offer a good, hands-on learning experience in picking the right properties to maximise your investment. Second, real estate crowdfunding can often carry a higher rate of return than shares or term deposits.

For would-be investors looking to save a deposit, putting your money in a crowdfunded real estate project could see it grow much faster than it would sitting in your savings account. The caveats to this, of course, is that returns aren’t guaranteed.

How do I find real estate crowdfunding projects?

Real estate crowdfunding in Australia is still in its infancy, but there are several platforms you can use to participate. These include the following:

  • VentureCrowd
  • DomaCom
  • CrowdfundUP

These platforms let individual investors buy shares in property projects. Different platforms carry different minimum investments, from $100 up to $5,000.

To get started, pick a platform with a level of investment, structure and choice of projects that suits you. Research the projects available to backers and decide which one looks most attractive to you. While most crowdfunding projects will give investors an idea of the rate of return they can expect on their investment, it always pays to do independent research on the properties or areas available for investment.

Alternatives to crowdfunding: REITs and fractional investing

If crowdfunding an investment doesn't work for you and traditional property investing is too expensive, you do have other options:

  • Fractional property investing. This form of investing is similar to crowdfunding, to the point where the 2 overlap (some of the platforms mentioned above call themselves fractional investment platforms). Fractional property investing allows you to purchase shares in investment properties that are purchased on the investing platform. A difference between this and crowdfunding is that the properties are already purchased when you invest in them. Whereas with crowdfunding, a group of investors may band together to fund a new development or purchase.
  • REITs. Real Estate Investment Trusts (REITs) are typically complicated, publicly traded investment vehicles that have to be managed by experts, carrying with them high maintenance costs and lower rates of return. REITs offer investors a stake in a real estate company, while crowdfunding offers investors a stake in a specific property or project.

Check out investment loans from across the market

$
years
Name Product Interest Rate (p.a.) Comp. Rate (p.a.) Fees Monthly Payment

Nano Variable Home Loans P&IInvestment≥ 25% Deposit Refi Only

Nano Variable Home Loans
2.29%
2.29%
  • App: $0
  • Ongoing: $0 p.a.
$578
Investors can refinance this no-fee variable rate loan. You will need a 25% deposit. Fast online approval.

Greater Bank Great Rate Fixed Home Loan P&IInvestment 1Y Fixed≥ 20% Deposit

Greater Bank Great Rate Fixed Home Loan
1.89%
2.27%
  • App: $0
  • Ongoing: $0 p.a.
$548
Lock in your interest rate for 1 year and pay no application or ongoing fees.

Athena Variable Home Loan P&IInvestment≥ 40% Deposit

Athena Variable Home  Loan
2.39%
2.39%
  • App: $0
  • Ongoing: $0 p.a.
$586
Investors with large 40% deposits or equity can get this low variable rate. A competitive option for investors looking to refinance.

UBank UHomeLoan Fixed P&IInvestment 1Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.14%
2.35%
  • App: $0
  • Ongoing: $0 p.a.
$567
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.

St.George Fixed Rate Home Loan with Advantage Package P&IInvestment 2Y Fixed≥ 20% Deposit

St.George Fixed Rate Home Loan with  Advantage Package
2.64%
3.96%
  • App: $0
  • Ongoing: $395 p.a.
$605
$3,000 refinance cashback.
Investors can lock in a competitive rate for two years with this package loan. You will need at least a 20% deposit. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 November 2021. Terms and conditions apply). Refinancers Only.

Westpac Fixed Option Home Loan Premier Advantage Package P&IInvestment 2Y Fixed≥ 5% Deposit

Westpac Fixed Option Home Loan Premier Advantage Package
2.64%
4.03%
  • App: $0
  • Ongoing: $395 p.a.
$605
$3,000 refinance cashback
A competitive fixed rate loan for investors that allows you to make up to $30,000 in extra repayments. Principal and interest loans only. $3,000 cashback for eligible refinancers. Apply by 30 November 2021. Terms and conditions apply.

Bank of Melbourne Fixed Rate Home Loan with Advantage Package P&IInvestment 2Y Fixed≥ 20% Deposit

Bank of Melbourne Fixed Rate Home Loan with Advantage Package
2.64%
3.98%
  • App: $0
  • Ongoing: $395 p.a.
$605
$3,000 refinance cashback.
Lock in a low rate for two years with this competitive investment package loan. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 November 2021. Terms and conditions apply). Refinancers Only.

loans.com.au Smart Booster Discount Investor Variable Home Loan P&IInvestment≥ 20% Deposit

loans.com.au Smart Booster Discount Investor Variable Home Loan
1.99%
2.71%
  • App: $0
  • Ongoing: $0 p.a.
$555
If you have an owner occupier loan with loans.com.au you can also get this very low rate variable mortgage for your investment property. Principal and interest repayments. Add an offset sub-account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.

Nano Variable Home Loans IOInvestment≥ 25% Deposit Refi Only

Nano Variable Home Loans
2.59%
2.40%
  • App: $0
  • Ongoing: $0 p.a.
$601
This variable investment loan has interest-only repayments and is for refinancers only. Fast online approval. Requires a 25% deposit.

Well Home Loans Balanced Fixed Home Loan P&IInvestment 3Y Fixed≥ 10% Deposit

Well Home Loans Balanced Fixed Home Loan
2.34%
2.25%
  • App: $250
  • Ongoing: $0 p.a.
$582
A competitive 3 year investor rate with principal and interest repayments. Optional offset account with a $10 monthly fee. Not available for construction purposes.

homeloans.com.au Low Rate Home Loan with Offset IOInvestment≥ 40% Deposit

homeloans.com.au Low Rate Home Loan with Offset
2.34%
2.15%
  • App: $0
  • Ongoing: $0 p.a.
$582
This competitive variable rate loan is for investors who want interest-only repayments. You will need a 40% deposit.

HSBC Home Value Loan P&IInvestment≥ 30% Deposit

HSBC Home Value Loan
2.27%
2.28%
  • App: $0
  • Ongoing: $0 p.a.
$577
$3,288 refinance cashback offer
This variable rate loan is available for property investors with 30% deposits. This loan has very few fees. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

UBank UHomeLoan Variable Rate P&IInvestment≥ 20% Deposit

UBank UHomeLoan Variable Rate
2.34%
2.34%
  • App: $0
  • Ongoing: $0 p.a.
$582
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.

Greater Bank Great Rate Home Loan P&IInvestment≥ 10% Deposit

Greater Bank Great Rate Home Loan
2.29%
2.30%
  • App: $0
  • Ongoing: $0 p.a.
$578
A discounted variable rate with a redraw facility and no application fee and no ongoing fee.

homeloans.com.au Low Rate Home Loan with Offset P&IInvestment≥ 20% Deposit

homeloans.com.au Low Rate Home Loan with Offset
2.14%
2.14%
  • App: $0
  • Ongoing: $0 p.a.
$567
This investment loan keeps fees low, has a sharp interest rate and comes with a 100% offset account. This loan is not available for construction.

UBank UHomeLoan Fixed IOInvestment 3Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.79%
2.47%
  • App: $0
  • Ongoing: $0 p.a.
$617
Pay no ongoing fees on this investment loan fixed for 3 years.

Well Home Loans Balanced Variable P&IInvestment≥ 20% Deposit

Well Home Loans Balanced Variable
2.17%
2.20%
  • App: $250
  • Ongoing: $0 p.a.
$569
If you're an investor with a 20% deposit saved you can get this low rate mortgage. Not available for construction.

UBank UHomeLoan Fixed P&IInvestment 5Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
3.04%
2.64%
  • App: $0
  • Ongoing: $0 p.a.
$637
Lock in a 5 year fixed rate on your investment loan and pay no ongoing fees.

Athena Variable Home Loan P&IInvestment≥ 30% Deposit

Athena Variable Home  Loan
2.49%
2.43%
  • App: $0
  • Ongoing: $0 p.a.
$594
Athena's refinance offer for investors and owner occupiers.

UBank UHomeLoan Variable Rate IOInvestment≥ 20% Deposit

UBank UHomeLoan Variable Rate
2.60%
2.52%
  • App: $0
  • Ongoing: $0 p.a.
$602
Pay interest only repayments with this special offer for investors.
loading

Compare up to 4 providers

More guides on Finder

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site