With the business world buzzing around crowdfunding, the idea of going straight to the consumer to raise capital for everything from product prototypes to feature-length films, the funding process has now stepped into the real estate realm.

Aside from corporate buyouts, real estate transactions can be some of the biggest deals, both in terms of dollar amounts and profits.

But how can smaller investors looking to invest in real estate afford to invest in larger deals like apartment or multifamily property?

What once was achievable only through something like an IPO, is now a possibility thanks to the JOBS Actwhich was signed into effect in 2012, helping small businesses and entrepreneurs access capital. In its current state, the options for how funding can be raised are limited, but once the SEC issues its regulations for crowdfunding, allowing non-accredited investors to participate, the number of investors will increase.

As it sits, companies are able to raise up to $1 million in capital within a 12-month period. Individuals with an annual income of less than $100k can raise up to 5% of their income, while those with an income over $100k can raise 10%.

While making any type of investment can be risky, investing in the real estate market might be too much for some investors to handle. For these types of investors, something like crowdfunding might just be the best new alternative.

Crowdfunding is the process by which a number of informed investors put money into a single deal by investing smaller, divided shares. In return, the investor is able to reap their fair share of profits based on the amount they invested; all while benefiting from the fact that, with a large pool of informed investors, their researched investment can expect to be a smart bet.

“Crowdfunding gives unprecedented new access to great real estate deals that I otherwise would not have known about or been able to afford without syndicating a deal,” says crowdfunding investor, Justin Miller.

The idea that you can invest as little as $5,000 and be part of a possible million dollar real estate deal is, as Justin puts it a, “revolutionary concept.”

This concept allows you to build your portfolio while diversifying your risk. For example, if you want to purchase a $1M property, you’d need to put up $300,000 and tie it up for a possible 30 years. With this new model a single investor could take that same $30k and invest $10k in 30 different deals.

“Risk diversification and unprecedented access, it’s a win-win situation!” says Miller, “Finally, leveraging investing in a syndicated deal that is much larger than you would normally be able to do on your own, there are higher returns on your money because they are professionally managed and achieve less cost with economies of scale.”

One element that needs to be addressed when preparing to seek out a firm is that the investors do their due diligence when it comes to entering a deal. With crowdfunding, the idea of bringing about more of a transparent state in the real estate transaction could be a good thing for the industry.

Realty Mogul CEO Jilliene Helman said on the subject, “Property management fees charged by firms that manage real estate syndication deals have traditionally been hard to dig up. That’s because companies typically can’t directly access the transaction data of a multitude of real estate investment companies.”

Are you an investor looking to get into a crowdfunding deal? Have you already finished a deal and have some useful advice to share?