Since writing the piece originally in 2015, property crowdfunding platforms have attempted to establish themselves in the Irish market, albeit with little success. What does this mean for you and your investment strategy? 

What is property crowdfunding?

By investing in a carefully selected range of resident and commercial properties, you become a part-owner and get a share of the rental income without having to worry about the property management side of things. The property is sold after an agreed term and you get a share of the profit.

In a rising property market, you may be encouraged to invest. And with the introduction of these platforms, there’s an accessible way for Joe Public to invest in residential and commercial property.

Property could be part of your investment strategy

Investing in property – through crowdfunding or otherwise – could be an important part of your investment strategy.

Commercial rents are going up, at least in Dublin, driven by a lack of grade A office space. Retail and industrial rents are also considerably higher today to just a few years ago. Interest rates are low and expected to stay low in the short-to-medium term. Nothing else to consider, right?

Thou must (and should) diversify

Many of you that read my blogs on a regular basis know what my thoughts are in relation to (Irish) property in particular. So the mantra must remain: Thou must diversify. And that doesn’t mean investing in houses in Baldonnel and a shop unit in Killorglin. Property is an asset class and investors are advised to diversify across asset classes.

“Where things can start to get ugly is when property IS your investment strategy, as has been the case for many Irish people”

For those of you familiar with former Wall Street Banker, Gordon Murray, his book The Investment Answer outlines that one of the five key decisions investors need to make is the asset allocation decision. He and co-author Dan Goldie espouse diversification across stocks and bonds, big and small, value and growth. They note that diversification protects against the potential losses of a volatile portfolio.

Time is more important than timing

Before you invest in any asset class you do some soul searching. What is it you need that investment to do for you? Is it going to be your pension, for example? How far away is that likely to be? If you don’t like what’s happening with your investments, then you shouldn’t be in them in the first place.

Property crowdfunding platforms such as Property Bridges typically charge fees to invest, with no guarantees over the quality of the underlying assets. It may provide an additional diversifier in an overall investment strategy, but not by itself.

As always, if you’d like to discuss an investment strategy that gives you the best chance of a reliable outcome long term, get in touch