You’ve probably heard of a lotto syndicate. A group of people that pitch in together to buy lotto tickets. You split the cost so it’s more affordable and increase the odds of winning because, with the cost shared, you’re usually playing more numbers. It’s all about teamwork and a shared responsibility. We think that a lotto syndicate is a good analogy for looking at The Property Crowd platform.
The Property Crowd is a crowdfunding platform. Just like in a lotto syndicate, you band together as part of a group to purchase a property, each contributing a portion of the total cost in order to make the purchase.
As part of a lotto syndicate, you all contribute to the same bet, picking your numbers as a team. On The Property Crowd platform you can pick from the properties you’d like to invest in. Others will contribute to the same property and you immediately become a part of that property’s syndicate. You’re working with a team of people to buy the house that you all prefer.
In a lotto syndicate, you might choose to chip in to play several different combinations of numbers to increase your chances of winning. The same can be done with The Property Crowd. You may choose to invest your dollars in more than one property.
In a lotto syndicate, a ticket can’t be purchased until everyone has chipped in their contribution. The same goes for one of our properties. The sale goes through once the syndicate has pooled enough money to make the purchase.
Chances are with a lotto syndicate that everyone contributes the same amount to buy the ticket. But The Property Crowd works a bit differently. With our platform, investors can contribute whatever amount they choose. For some, that might mean contributing as little as $100 to the property whereas others may choose to contribute $10,000 or more.
The amount you contribute will determine how much of the house you own. So, if one of the properties costs $1 million dollars to purchase and you contribute $100, you own 0.01% of the property. A $10,000 contribution would give you 1% ownership. It might not sound like a lot, but the beauty of The Property Crowd is that you can invest in many properties over time. You might choose to contribute each month in the same way you might in index funds or a savings account.
One significant way in which The Property Crowd differs from a lotto syndicate is what the investors get out of it. A lotto ticket is worth nothing unless the right numbers are drawn and the jackpot is hit. But with a share in a Property Crowd property, the investor can expect a return.
The return that offers the most instant gratification is dividends. All our properties are positively geared. That means that the money made from the rental income exceeds the costs to keep the property running. This difference is split between the investors and shared out as regular payments called dividends. The more money you’ve invested in the property, the higher your dividend payment will be.
If your lotto ticket doesn’t win, you and your syndicate get nothing, and you probably go on to play again the following week hoping for the best. Every week it’s a gamble.
Investing with The Property Crowd is much less risky. We advise investors to hold on to their shares for as long as possible so that you are investing for the long term. But you can choose to sell your shares to other members, or new members, of the syndicate at any time. This allows you to free up cash and potentially return a capital gain if the property has increased in value.
The Property Crowd vs a Lotto syndicate. Given the choice, what would you choose?FIND OUT MORE