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Real estate, until recently, were only available to a few people with enough savings to embark on the purchase of a flat or through REITs (which don’t allow you choose your projects). The Real Estate Crowdfunding platforms have meant a revolution in the sector by removing entry barriers to real estate investments (high acquisition cost, maintenance and difficulty to diversify). Today, anyone can invest from just 50 EUR. The main advantages of real estate crowdfunding over the traditional real estate approach include:
- Easy access to real estate for anyone with a few euro. The minimum investment per project is usually around 50 Euro, except for Crowdestate (where the minimum is 100 EUR).
- No need to look for tenants, or worry about delayed payments, or make repairs.
- Allows to build quickly a highly diversified portfolio in different countries / cities, types of property (apartments, shops, hotels) and modes of operation (reform and sale, reform-hire-purchase, construction, loans to developers, etc.
- Possibility to sell shares in the secondary market (just on some platforms).
The participative financing of real estate projects is perhaps where there is greater diversity in terms of systems and payment modalities, including development projects, rentals or loans with mortgage guarantees. Although they do not usually offer repurchase guarantees (Buyback), since they offer investments in tangible assets, there are realistic options to recover at least part of the investment in case of defaults through the sale of the property, thus presenting generally a lower risk than personal or commercial loans.
There are countless Real Estate Crowdfunding platforms, especially in the United Kingdom, but also in Germany, France, Spain … In recent years, several of such platforms have emerged in the Baltic countries offering really attractive returns. Although I have explored many, at the moment I only have first-hand experience in a few that I will describe in detail.
Real estate investments, whether traditional or participatory, are always medium to long term. Some platforms do not offer benefits until the property is sold, which may imply over a year. This means that a long period (months or even over a year) is needed until one can obtain return rates comparable to other forms of crowd investment, such as P2B crowdlending, but particularly P2P crowdlending, where you can invest significant amounts of capital in a very diversified way (10 Euro per loan, or sometimes even less) in a matter of seconds. In addition, each real estate crowdfunding platform only offers a limited number of projects (sometimes only one or two per month), which means it takes time to invest significant amounts of money in a diversified portfolio. To compensate, the Real Estate Crowdfunding platformsby offering a property as collateral, is considered safer than other crowdlending modalities.
I mainly invest in nine platforms: four Spanish (Bricktarter, Housers, Inveslar and Privalore), four from the Baltic countries (Bulkestate, CrowdEstate, EstateGuru and Rendity) and one aggregator: EvoEstate. I have tried two other platforms: Bricks&People (Also Spanish) and Brickowner (British), but only a few investments, so I have not yet gathered enough information to analyze. Grupeer also mention that, while offering investment properties focusing on crowdlending, so I’ll cover in detail in another section.
The business model of each platform is quiet varied, but it is curious that Spanish ones are characterized by variable terms and interest rates (because they focus on buying-remodeling-selling or adding a rental phase in the middle), while the Baltic ones tend to have fixed terms and interest rates. Housers is perhaps the exception, offering the greatest range of modalities and it looks like Inveslar, little by little, is following the same steps.