Four Things to Know Before Participating in a Crowdfunding Campaign

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Crowdfunding campaigns are incredibly hot right now. Sites like Fundrise, Kickstarter and others allow people to create accounts and seek investors willing to invest in the business plans and ideas that they have. Some sites even let you invest in the real estate market and become a partial owner in a strip mall, commercial building or office complex in your city or another city. Before you grab your credit card and start handing over your money, there are four important things you should know about participating in a crowdfunding campaign.

Size of Investment

Always make sure that you read the entire listing for each investment opportunity that interests you to get an idea of how much you need to invest. While some sites let you invest as little as you want and will accept cash amounts of just a few dollars, other sites require that you invest a larger sum. This often relates to the person or company listing the investment opportunity. They may only accept investments of a few hundred dollars or even several thousand dollars.

Possible Risks

The top crowdfunding sites now have rules in place that prevent users from taking advantage of each other. This arose after several popular campaigns took money from investors and seemingly disappeared with the cash and without giving investors anything back. Investors can file complaints with the site about any problems they have and let the site investigate the claim. If you aren’t sure about the risks associated with a crowdfunding campaign, you can read Fundrise reviews and other reviews for similar sites. Those reviews let you know whether previous investors were happy or unhappy with the investments they made on the site and to certain campaigns.

Common Rewards

No one invests money without expecting to get something back. The something that you get back is a reward that comes from the individual or entity who created the campaign. Rewards commonly relate to the end result or what the person will use the money towards. Your reward depends on the amount you invested though. If you invest a small amount in a commercial strip mall, you might get a plaque with your name on the wall. Those who donate towards an investment property may get a small percentage of the lease or sale price of the building later. When investing in specific products, you might get a sample of that product before it goes up for sale.

Built-in Protection

The top crowdfunding sites now offer built-in protection designed to help investors and those looking for investors. Many sites require that users decide how much they want to make before the account goes live. Those users only get the cash if they reach the amount listed. If you invest in a company that wants to make $500,000 and only makes $350,000, the site will refund you the money you invested. The user then has the chance to start a new campaign to raise those funds.

Investing in crowdfunding campaigns online can help you get your hands on new products before anyone else does and invest in local companies that need your help. You may even make money as a partial owner in a new property. Before investing through a site though, you should check for the protection awarded to investors and the possible risks and rewards.

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