Real estate Crowdfunding has a number of advantages over traditional investment in real estate 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 when we decide to make an investment, be it real estate 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 compared to traditional investment in real estate:
- 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 go from € 1.000, or even less depending on the type of project.
- Choosing the type of property to invest in: It minimizes risks, since it allows diversification in different types of projects and real estate assets (promotions of new homes, purchase of homes for reform for a later sale and / or rental, etc.) as well as in different populations, and even in other countries.
- Attractive Return Terms: Short-term investment and results-obtaining periods, 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 the investment risks.
- The Investor chooses each asset in which to invest: In investments through real estate crowdfunding, it is the investor who decides in what type of investments to participate, unlike what happens with investment funds, or real estate investment companies, that investment projects are decided by the investors. Management bodies of these entities.
- Asset Independence: Each of the projects in which it is invested is independent of the others, thereby minimizing the risks of investments.
- Reduce red tape: Reduction of terms, since investments are made online, in a very simple way and it is the crowdfunding platform itself that is in charge of carrying out all the bureaucratic procedures for 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 it is more agile and fast, at the same time that it enables them to finance different projects.
- Diversification means less risk: Like any type of investment, real estate crowdfunding, is exposed to risks, however, these are minimized in part by the possibility of diversification and 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 is a protection for the investor and prevents the appearance of fraud.
- Regulation in Spain through the Law of Participatory Financing Platforms: The Law on Participatory Financing Platforms tries to regulate and define the sector considering platforms to those companies whose mission is to put people or companies in contact at a professional level and online that grant any type of financing in exchange for an economic benefit ( investors) with those who request financing (promoters).
- Proven success in other markets: Real estate Crowdfunding was born in 2012 in the United States by the Miller brothers. Since its inception they have invested more than $ 1.4 Billion.
- Number of existing platforms: Currently, there are already more than 200 platforms throughout the world spread over five continents. In Europe, England and France, they are the ones that have most developed this Crowdfunding model.
- Traction in Spain: In the case of Spain, although it has been implemented for a short time, in just two years investments worth more than 23 million euros have been made, this means an increase of 21% compared to the previous year, according to the report by Universo Crowdfunding , these figures do nothing other than corroborate the good condition of this type of platform.
How could you verify the advantages of Real estate crowdfunding over the traditional are numerous. It is a fact that innovation in the real estate sector has come to stay, making the sector much more dynamic and that investment in real estate assets is accessible to a greater number of investors who just a couple of years ago could not access this type of investment due to economic entry barriers that has now been diluted thanks to crowdfunding.
Forecasts for the coming years are promising and a considerable increase in investment volume is expected.