P2P lending is making significantly more of an impact in today’s investment market, and we at Luxe Crowdfunding in Chicago know how critical it is for a modern investor to understand this new option. When you consider how to invest in real estate, you may not consider P2P lending as an option, but the benefits of this new method are beginning to outweigh those of alternative, more traditional methods.
What is P2P Lending?
P2P lending, or peer-to-peer lending is a lending option that allows borrowers to seek out funds for an investment project from their peers. Typically, this is done through a platform that can connect investors wit borrowers. The appeal of this method is that interest rates can be much lower than they would be through traditional means, which means that borrowers who would have difficulty securing a loan from a bank can opt for P2P lending instead. For lenders, the freedom to set their own interest rate means that they can set a rate higher than a standard savings account.
Because P2P lending is not guaranteed by a government entity, it is the lender’s job to select a borrower and ensure that they will be capable of repaying their loan. While some lenders may choose to opt for a secured loan rather than an unsecured one, it is still possible for the borrower to default on their loan.
In some cases, platforms exist to connect only qualified borrowers with lenders. In these cases, the platform itself does the necessary checks in order to vet the borrower and ensure the investor that they are a qualified candidate. After this is done, the borrower then pays their loan through the same platform, and this payment is transferred to the investor.
How to Invest in Real Estate with P2P Lending
In many cases, the platforms that cater to peer-to-peer lending do not vet the actual borrowers for the investors. This means that it is on the investors to do the work of ensuring that they will have their loan repair.
What Luxe Crowdfunding does differently is that we make sure that every project on our platform is sure to bring a return on your investment. As an investor, we want you to feel secure that you are investing in something that will profit and grow. That is why we only present to you the highest quality opportunities that are optimally located, well-equipped, and securely run.
Luxe Crowdfunding offers investment opportunities in Chicago and Florida. We want those who are beginning to learn how to invest in real estate to be exposed to every option at their disposal. With the help of a platform such as ours, real estate investment is more accessible, more understandable, and more profitable. To learn more about P2P lending, contact us at Luxe Crowdfunding today.