Real estate investing through online platforms, commonly known as real estate crowdfunding, has gained significant popularity in the last decade. It allows individual investors to pool their money together to invest in real estate projects or properties. This model democratizes access to real estate investing, which was traditionally the domain of wealthy individuals or institutional investors.

Here’s how it typically works:

1. **Platform Selection**: You start by choosing an online real estate investment platform. Some popular platforms include Fundrise, RealtyMogul, Crowdstreet, and DiversyFund. Each platform has its own focus, fee structure, minimum investment requirements, and selection of available investments.

2. **Account Setup**: Next, you create an account on the platform of your choice. This may involve providing personal and financial information to meet regulatory compliance standards.

3. **Due Diligence**: Perform due diligence on the available investment opportunities. Platforms usually provide detailed information on each investment, including financial projections, business plans, and information about the property and its managers.

4. **Investing**: After selecting a suitable investment, you decide how much to invest. Investments can be as low as a few hundred to a few thousand dollars, depending on the platform and the project.

5. **Funding**: Funds are transferred to the project. Some platforms may require that you deposit funds into an account with them first.

6. **Management**: Once funded, the real estate project is managed by the project sponsors or managers. As an investor, you typically don’t need to handle the day-to-day operations.

7. **Returns**: You hopefully receive periodic distributions based on the rental income, interest, or eventual sale of the property, depending on the nature of the investment.

8. **Exit**: The investment is often (but not always) illiquid, with a predetermined time frame for when you can expect your capital to be returned, usually after the property is sold or refinanced.

**Types of Investments**:
– **Debt Investments**: Investors receive regular payments from the interest generated by lending money to the property owner or developer.
– **Equity Investments**: Investors get a share of the ownership in the property and, hence, a portion of the rental income, as well as potential profits from the sale of the property.

**Pros of Online Real Estate Investing**:
– Accessibility: Lower minimum investments open the market to non-accredited investors.
– Diversification: Individual investors can spread their risk across different properties and geographical areas.
– Passive Income: Potential for passive income in the form of regular distributions from the investment.

**Cons of Online Real Estate Investing**:
– Liquidity: Investments in real estate through online platforms are often illiquid for several years.
– Risk: Real estate markets can be volatile, and investments are subject to market risks, including economic downturns and changes in interest rates.
– Fees: Real estate crowdfunding platforms generally charge fees for managing investments, which can impact overall returns.

**Regulation and Considerations**:
– Regulated by the Securities and Exchange Commission (SEC) in the United States and similar regulatory bodies in other countries.
– Often restricted to accredited investors, but some platforms offer opportunities to non-accredited investors in accordance with Regulation A+ or Regulation Crowdfunding under the JOBS Act.
– It’s crucial to understand potential tax implications for any distributions received.

As with any investment, it’s important to conduct thorough research and consider your own financial situation and risk tolerance before investing in real estate through online platforms.