---
title: How real estate crowdfunding has evolved
description: Discover a brief history of real estate crowdfunding, its many benefits over traditional property investment and Shojin’s unique crowdfunding platform
image: https://www.shojin.co.uk/hubfs/Blog/How%20real%20estate%20crowdfunding%20has%20evolved/How-real-estate-crowdfunding-has-evolved.jpg
---

 Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 minutes to learn more.

 Risk information

**Risk summary for investments in speculative illiquid securities which are arranged by a firm by way of an online platform.**

 

**Estimated reading time: 2 min**

 

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be very complex and high risk.

 

**What are the key risks?**

 

1. **You could lose all the money you invest** 
     - By investing into a real estate project through Shojin you will be investing in a Bond instrument issued by Special Purpose Vehicles (SPV’s) which provide a funding facility for the purpose of real estate development. If the project fails, Investors can lose some or all of the money they invested.
     - Advertised rates of return aren’t guaranteed. This is not a savings account. If the project doesn’t pay the SPV back as agreed, you could earn less money than expected or nothing at all. A higher advertised rate of return means a higher project risk with an increased probability of losing your money.
     - Due Diligence and project oversight is carried out by the platform on each Shojin project that you are investing into to assess how well they are expected to perform. However, you should always also do your own research before investing.
     - These investments are sometimes held in an Innovative Finance ISA (IFISA). While any potential gains from your investment will be tax free, you can still lose all your money. An IFISA does not reduce the risk of the investment or protect you from losses.
2. **You are unlikely to be protected if something goes wrong** 
     - Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. [Try the FSCS investment protection checker here.](https://www.fscs.org.uk/check/investment-protection-checker)
     - Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. [Learn more about FOS protection here.](https://www.financial-ombudsman.org.uk/consumers)
3. **You are unlikely to get your money back quickly** 
     - This type of property investment could face delays that can delay payments. These investments could also fail altogether and be unable to repay investors their money.
     - You have the opportunity to sell your investment early through the secondary market but there is no guarantee you will be able to find someone willing to buy.
4. **This is a complex investment** 
     - This investment has a complex structure to ensure the interest of investors is protected. Investments are made into each designated project SPV and are ringfenced from other project SPV's to ensure full transparency of each investment made.
     - You may wish to get financial advice to understand how the structure works before deciding to invest.
5. **Don’t put all your eggs in one basket** 
     - Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
     - [A good rule of thumb is not to invest more than 10% of your money in high-risk investments.](https://www.fca.org.uk/investsmart/5-questions-ask-you-invest)

[If you are interested in learning more about how to protect yourself, visit the FCA’s website here.](https://www.fca.org.uk/investsmart)

[For further information about minibonds, visit the FCA’s website here](https://www.fca.org.uk/consumers/mini-bonds).

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[Blog](https://www.shojin.co.uk/insights/tag/blog)  3 min read

# How real estate crowdfunding has evolved

![](https://www.shojin.co.uk/hubfs/Blog/How%20real%20estate%20crowdfunding%20has%20evolved/How-real-estate-crowdfunding-has-evolved.jpg)

![](https://www.shojin.co.uk/hubfs/Blog/How%20real%20estate%20crowdfunding%20has%20evolved/How-real-estate-crowdfunding-has-evolved.jpg)

**The future is bright for online real estate crowdfunding investment platforms**

 

Real estate has always been a popular investment choice for those looking to put their money to work. Traditionally, it is less volatile than the stock market and provides investors with something that shares cannot– a tangible, ‘real world’ investment that provides a predictable and long-term income stream. ‘Safe as houses’ has become a well-worn phrase in the British language for this reason. 

 

However, for most of recorded history, investing in property has been out of reach for the majority. The high baseline prices of real estate created insurmountable barriers that only very wealthy individuals and institutions could overcome. It was not only investors who were kept out of the market, either – developers and project owners without the right contacts also found it difficult to get schemes funded and off the ground. 

 

All of this changed with real estate crowdfunding, introduced off the back of the 2012 Jumpstart Our Business Startups (JOBS) Act in the United States. The JOBS Act allowed non-accredited investors to invest in properties, and for project owners and developers to market their projects publicly to a larger crowd of investors and benefit from other, previously inaccessible, sources of funding.

 

Since then, the real estate crowdfunding space has gone from strength to strength, and is expected to reach a sector value of around $868,982 million (i) – with a compound annual growth rate of around 58.3% – between now and 2027. We take a look at how real estate crowdfunding originated and why the future is bright for online property investment platforms.

 

**What is real estate crowdfunding?**

 

Real estate crowdfunding puts the power back into the hands of the ordinary investor. By allowing individuals to combine their money, property can be invested in at a fraction of the total cost. This lowers the barriers to entry and provides countless opportunities for investors to diversify their portfolios with property. 

 

Crowdfunding also offers fast liquidity and optimal efficiency for developers, while investors can enjoy the benefits of real estate from their laptops and mobile devices anywhere in the world. 

 

In recent years, European legislation has looked to solidify and regulate the market in which crowdfunding platforms operate. This allows investors to participate more easily and with more security, leading to an enormous rise in the number of platforms and projects available.

 

Despite the challenges that Covid-19 posed to the economy in 2020, real estate crowdfunding still returned an average of 8% per annum with 80-95% of the beneficiaries being passive investors (ii). This stability in times of turmoil will surely be of interest to investors looking to cement predictable returns on capital and to diversify their portfolios.

 

**The benefits of real estate crowdfunding**

 

Real estate crowdfunding is a fast and effective way to put your money to work. Not only has it made real estate more accessible as an investment vehicle, it has also added a layer of security that did not exist in the traditional model. 

 

One of its biggest strengths when compared to traditional real estate investing is that it does not require you to put all of your eggs in one basket. The lower costs and abundance of projects means investors can diversify their portfolios across the globe, in many different areas of real estate, thereby minimising risk. Investing through the right platform also means working with experienced professionals – no day-to-day project management is required. 

 

That is not to say that projects cannot go wrong. Money can be lost and investors do need to be aware of the risk – but the combination of simplicity, affordability and diversification makes it a fantastic option for any investor.

 

**Why Shojin is a leading online real estate crowdfunding platform** 

 

Shojin provides access to institutional-grade investment opportunities in the UK real estate sector to investors around the world. All of the projects we decide to take forward and offer to our members are handpicked by our analysts and subject to extensive due diligence. For every one project we offer you as a viable investment, we have rejected 100. 

 

As a growing platform, [we invest with you in every project](https://www.shojin.co.uk/how-we-work). We think it is important that we have ‘skin in the game’ along with you, and our track record speaks for itself. 

 

Our team has decades of experience in this space, with talents ranging from investment banking to risk analysis. As a result, we have investment products and projects that suit all finance levels and risk profiles. It is our mission to democratise real estate crowdfunding, and we hope you will join us. 

 

Similar to many business sectors, 2020 was a challenging year for the real estate crowdfunding industry. However, despite the unprecedented economic environment, which is thankfully beginning its recovery, demand from investors has only grown. In the following years, it is probable we will look at the events of 2020 as having a ‘forest fire’-like effect on the nascent crowdfunding industry – burning away the platforms that were not ready and could not offer value to their investors. 

 

We are now at an important stage in the development of real estate crowdfunding. The building of investor trust and extensive due diligence on investment opportunities on behalf of the investor – values that Shojin embodies and puts into practice – will be increasingly important, and the growth we see will be immensely rewarding for both investors and developers alike. The floodgates are now open for new types of investors to reap the benefits of bricks and mortar. A rising tide raises all ships, as they say. 

 

If you would like to learn more about [our products](https://www.shojin.co.uk/our-products), and how we can help you, download our Enlightened Investor Guide. 

 

Or read more about [our co-investment model](https://www.shojin.co.uk/our-investment-model)and find out how you can invest from £5,000 and enjoy a diverse portfolio.

 

**References**

 

i)  [https://www.forbes.com/sites/forbesbusinesscouncil/2021/12/28/crowdfunding-the-investing-gateway-of-...](https://www.forbes.com/sites/forbesbusinesscouncil/2021/12/28/crowdfunding-the-investing-gateway-of-the-future/?sh=3a2c6672ee02)

ii) [https://www.crowdcrux.com/real-estate-crowdfunding-statistics-in-2020/](https://www.crowdcrux.com/real-estate-crowdfunding-statistics-in-2020/)

[Written by Shojin Property Partners](https://www.shojin.co.uk/insights/author/shojin-property-partners)

 Published 

 08 June 2021

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 Important note

Please note that property investments involve risks including loss of capital, illiquidity, default of a borrower and lack of returns. The risks involved will vary by project types, so please make sure you have read and understood the specific risks associated with the investment. Investments made on this website should only be made as part of a diversified investment portfolio. For more details, see the Key Risks. Projections or estimated returns are not a reliable indicator of actual future performance and eventual returns or dividends may be lower than predicted. Information presented on this website is for guidance purposes only and does not constitute financial advice. If you are unsure of the suitability of an investment, please contact your financial adviser for professional advice.

Shojin is a trading name of Shojin Financial Services Limited. This website is a financial promotion approved by Shojin Financial Services Limited which is authorised and regulated by the Financial Conduct Authority (FRN: 716765) (see [www.fca.org.uk/register](https://www.fca.org.uk/firms/financial-services-register) for more information). Companies that issue investments on this platform, including bonds issued by Shojin entities, are not themselves regulated by the Financial Conduct Authority and investments made on this site are not covered by the Financial Services Compensation Scheme. The investment opportunities listed on this website are not offers to the public and can only be entered into by certain types of investors who have satisfied certain investment criteria.

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