Crowdfunding or micro-patronage allows projects to be financed thanks to individual contributions from other people, which can be disinterested or in exchange for some kind of reward.
This way of collecting money has very interesting applications in the housing market. That’s why a trustful technology partner specialize in managing crowdunding payments is so important.
When this type of collaborative economy is related to brick, it is called real estate crowdfunding.
Here we explain what it is, we reveal some platforms that specialize in this system and we inform you about the pros and cons of using it.
Let’s start from the beginning.
What is real estate crowdfunding?
Crowdfunding real estate is a way to invest in the real estate sector without the need to spend a huge amount of money since that investment is made together with other people.
Generally, people buy premises or houses to renovate them and sell them for more money, although they may also buy houses and flats that are considered to be going up in price and bet on buying a part of them now that they are theoretically cheaper.
They can even be rented for the duration of the project.
Real estate crowdfunding platforms
In order to have access to real estate crowdfunding, it is necessary be part of a specialized platform.
They are in charge of everything. They find the properties, analyze them, publish them with all kinds of data, reform them, and sell them.
The investor only has to worry about choosing where to put his money. In exchange for all these facilities, the real estate crowdfunding platform will charge a commission.
Among the real estate crowdfunding platforms that you can find in Spain we highlight:
- Inveslar. It is one of the first real estate crowdfunding platforms in Spain. It specializes in investments in the center of Barcelona, an area where prices are constantly rising. You can invest from 100 euros.
- Bricks&People. Its real estate portfolio and it’s big data have a very good reputation. With only 50 Euros you can already make an investment. Its returns are very attractive.
- Privalore. It has a team of specialized developers in the center of Madrid and Barcelona. They give value to the care of the environment.
Safety on real estate crowdfunding platforms
Crowdfunding platforms work by means of escrow. The money invested is kept until the project achieves its goal. If this goal is not reached, the money is returned to the investor.
The best way to keep track of every penny invested is to have Blockchain technology.
Real Estate Crowdfunding Opinions: Pros and Cons
The biggest benefit of real estate crowdfunding is that it allows you to invest in real estate with little money and with only one asset.
It also makes it possible to enter and exit the sector whenever you want.
In addition, the collaborative economy is booming and more and more people are participating in it, so crowdfunding is going to grow, managing to finance more and more projects.
On the other hand, as in any other type of investment, there are risks. The real estate market is volatile and no one can assure you that what you buy today cannot go down tomorrow. That is why it is advisable to have financial knowledge.
You have to bear in mind that there is a limit to what you can invest in crowdfunding. According to Law 5/2015 on Business Financing, non-professional investors cannot invest more than 3,000 euros per project or 10,000 euros per year.
On the other hand, accredited investors do not have a limit for investment, although the projects in which they participate may not exceed 5 million euros.