Real estate crowdfunding has a number of advantages over traditional real estate investment and is causing a revolution in a sector that has traditionally been very conservative and little given to technological changes.
Why invest in Real Estate Crowdfunding?
It is important to note that at the time we choose to make an investment, whether of a real estate nature or any other type, we must always have some knowledge and never invest in those complex products that we do not fully understand. In the specific case of real estate crowdfunding we must consider what are the advantages of this investment system over traditional real estate investment:
- Possibility of access to small investors: It allows real estate investments not only to large investors, but also to people with little economic capacity, since it allows investments that can range from € 1.000, or even less depending on the type of project.
- Choice of the type of property to invest in: It minimizes the risks, since it allows diversification in different types of real estate projects and assets (promotions of new homes, purchase of homes for reform for later sale and / or rent, etc.), as well as in different populations, and even in other countries.
- Attractive Return Terms: Investment terms and obtaining short-term results, which can range from one year, and except in exceptional cases, to no more than five.
- It is not necessary to be a real estate expert: It is not necessary to have high knowledge of real estate investment, since crowdfunding platforms have experts who select and analyze the different projects in order to minimize investment risks.
- The Investor chooses each asset in which to invest: In investments through real estate crowdfunding, it is the investor who decides in which type of investments to participate, unlike what happens with investment funds, or real estate investment companies, that investment projects are decided by the Management bodies of these entities.
- Asset Independence: Each of the projects in which it is invested is independent of the others, which minimizes the investment risks.
- Reduction of bureaucratic procedures: Reduction of deadlines, since investments are made online, very simply and it is the crowdfunding platform itself that is responsible for carrying out all the bureaucratic procedures of the purchase and registration of the different assets, as well as the subscription of the participations
- Alternative to Bank Financing for Promoters: For real estate developers it is an alternative to bank financing and they find it more agile and faster, while allowing them to finance different projects.
- Diversification implies less risk: Like any type of investment, real estate crowdfunding, it is exposed to risks, however, these are minimized in part by the possibility of diversification and also because the investment is always based on a physical asset.
- Supervision by the CNMV: The Real Estate Crowdfunding Platforms are subject to supervision, inspection and, where appropriate, sanction by the National Securities Market Commission (CNMV), which means protection for the investor and prevents the appearance of fraud.
- Regulation in Spain through the Law of Participatory Financing Platforms: The Law of Participatory Financing Platforms tries to regulate and define the sector considering platforms to those companies whose mission is to contact professionally and online people or companies that grant any type of financing in exchange for an economic benefit ( investors) with those who request financing (promoters).
- Proven success in other markets: The real estate crowdfunding, was born the year 2012 in the United States of the hand of the Miller brothers. Since its inception they have invested over 1.4 Billions of $
- Number of existing Platforms: Currently, there are already more than 200 platforms spread across the five continents worldwide. In Europe, England and France, they have developed this Crowdfunding model the most.
- Traction in Spain: In the case of Spain, although it has been implemented for a short time, in just two years investments have been made worth more than 23 million euros, this means an increase of 21% compared to the previous year, according to the report made by Crowdfunding Universe , these figures do nothing but corroborate the good state of this type of platforms.
How could you verify the advantages of Real estate crowdfunding On the traditional they are numerous. It is a fact that innovation in real estate has come to stay, make the sector much more dynamic and that investment in real estate assets is accessible to a greater number of investors who only a couple of years ago could not access This type of investment due to the barriers to economic entry that has now been diluted thanks to crowdfunding.
The forecasts for the coming years are promising and a considerable increase in the volume of investment is expected.