Crowdsourcing—the act of pooling together funds with other investors to create a larger overall investment—allows everyday Australians to become property developers, says OpenCorp director Matthew Lewison.

OpenCorp has been using crowdsourcing in various capacities since 2009, and recently created an ongoing ‘Open Access Fund’ – Australia’s first ever crowdsourced property fund of its type. Since launching less than two months ago, the Open Access Fund has enlisted over 160 active investors totalling more than $14.0 million in funds.

Lewison says the product allows clients to invest in a fund that is managed by a team of property investment specialists, with the opportunity for clients to allocate money to new projects as they wish, each with a fixed investment term. "The choice of when and how much to investment remains the decision of the customer," he says. "Profits plus original capital are paid out after settlement."

If someone were to invest $50,000 into this type of fund, they may choose to allocate $20,000 towards a current project, and leave their remaining $30,000 in the “cash class” waiting for a future project of their choosing. The benefit provided to the property investment company is essentially the opportunity to act more quickly on new acquisitions and negotiate on stronger terms, giving rise to additional high quality opportunities for the company and its clients. 

Lewison says the Australian market now boasts a number of products, funds, companies and platforms using crowdsourcing. "Some are based entirely online and offer a range of projects for clients to invest in, while others offer opportunities of just the one developer," he says. "Some offer ongoing financial support, others require clients to seek advice externally."

Some funds on the market allow clients to invest for as little as $10,000, with investment into specific projects for as little as $100. These figures are significantly less than what’s typically required to purchase a home, currently $73,000 in Sydney, $47,000 in Brisbane, $34,000 in Hobart and $56,000 in Melbourne (based on the average 10 per cent deposit as reported by the latest Housing Industry Association Affordability report).

Lewison says one of the advantages of investing this way is the ability to be in multiple markets at the one time for a relatively low price.

Crowdsourcing also essentially removes the admin that comes with property investment, which might deter some investors. "Depending on the company and product, investors are sent regular updates about their investments, without being subject to the ongoing administration required to successfully manage a property portfolio," he said.