Is real estate crowdfunding legal in Canada?

Are you considering investing in the real estate market but don't have enough money to invest alone? Money.ca explains why real estate crowdfunding could be the solution. With home prices on the rise in Canada, there is no doubt that real estate can be a lucrative investment. However, the problem for many Canadians is that while they have some investment capital, they don't have the large sums of money needed to purchase real estate on their own.

Crowdfunding essentially democratizes access to real estate by allowing individuals to pool their resources and collectively invest in high-value real estate. Whether you're a seasoned investor looking to diversify your portfolio or a beginner looking to try real estate investing, crowdfunding offers a unique opportunity. In this article, Money.ca explores what Canadian real estate crowdfunding is so you can decide if it's the right investment for your needs.

What is real estate crowdfunding in Canada?

Real estate crowdfunding in Canada is when a group of individuals pool their funds to invest in real estate that would otherwise be difficult to purchase on their own.

This investment method gives small investors the opportunity to participate in large real estate transactions that can cost millions of dollars. Online crowdfunding platform makes it easier for Canadians of more modest means to build wealth by investing in residential, commercial and industrial real estate across the country by leveraging the collective capital of multiple investors It will be.

It is important to note that the amount of money you receive from your investment depends entirely on the amount invested. Profits are based on the percentage invested.

Is crowdfunding legal in Canada?

You may be new to real estate crowdfunding in Canada, so it's understandable to wonder if it's legal. The answer is that real estate crowdfunding in Canada is indeed legal, but there are some strict regulations (written and supervised by the Canadian Securities Administrator) to govern how crowdfunding works. That's what it means.

Canadian crowdfunding laws

The Canadian Securities Administrators oversee crowdfunding in Canada to ensure these platforms comply with securities laws (the law regulates crowdfunding in general, not just real estate crowdfunding). ). These regulations are designed to protect investors and maintain the safety and legitimacy of Canada's investment markets.

Here are some examples of key crowdfunding regulations in Canada.

The operation of unregistered and unlicensed platforms is prohibited in Canada, and only legal and compliant platforms can offer investment opportunities. Companies can raise up to $1.5 million a year through crowdfunding (up from the previous cap of $500,000). Each individual investor can only offer $2,500 per trade. Additionally, this limit may be further increased up to $10,000 if the registered dealer confirms the suitability of the investment. Canadian crowdfunding regulations specifically require real estate crowdfunding portals to specify the minimum amount required for a project to be successful. If this minimum amount is not reached, the funds must be returned to the investor.

Canada’s Top Real Estate Crowdfunding Platforms

Despite the fact that real estate crowdfunding is a relatively new idea in Canada, several real estate crowdfunding platforms have started operating in the country in the last few years, including:

Addy Invest: Canada's largest platform, this Vancouver-based company works with both accredited and non-accredited investors. With investments starting from just $1, it's an accessible way to get started in real estate crowdsourcing. BuyProperly: This online platform operates in both Canada and the United States and specializes in real estate investment opportunities.

What does a real estate crowdfunding platform do?

Real estate crowdfunding platforms essentially act as intermediaries between investors and real estate investment opportunities. They research investment opportunities, select viable properties, recruit investors, and manage all investments.

Is real estate crowdfunding worth doing?

Real estate crowdfunding is still not easily accessible in Canada due to the risks and lack of funding platforms. It is up to potential investors to feel comfortable investing in this relatively new and less popular form of investment. Let's take a look at the pros and cons of real estate crowdfunding in Canada.

Strong Points

Accessibility: Crowdfunding allows investors with modest means to invest in real estate. Pooling resources online allows individuals to participate in real estate projects that typically require large amounts of capital and were previously available only to wealthy Canadians. Diversification: Investing in real estate is a good way to diversify your portfolio. Reduced administration: You don't need to know much about property management as the platform takes care of it and the law for you. In other words, you can become a passive investor.

Disadvantages

Potentially High Risk: This type of investment and platform is new to Canada and is not yet well established, so it may be risky to invest your funds. Due Diligence: Investors must carefully research and select projects. Limited Choices: Few companies offer this type of investment, so your platform choices are limited. Limitations: Strict regulations may limit the opportunity and ease of investing.

This article was created by Money.ca and reviewed and distributed by Stacker Media.