Real Estate Crowdfunding: Benefits and Risks

Drawing with crowdfunding concept in the notepad
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The Real Estate Crowdfunding is a new form of finance that allows investors to invest in real estate fartes through a platform. The Platform Provids The Necessary Tools and Information to Investors, Such as a Website with Detailed Information about Each Project and its potential profitability. The Platform also Provids Investors with a Guarantee that they will receive their investments back if the project do not success. In addition, The Platform Provids Investors With An Opportunity to Participate in Projects that are not yet launched, but that have already been approved by the developers. This article Will Explain What Real Estate Crowdfunding is, How It Works and What Are Its Benefits and Risks.

What are the advantages and risks of crowdfunding from real estate?

Crowdfunding or crowdfunding is a financing system that allows project leaders, through the Internet, to bring natural or legal persons to participate in the financing of their project.

Crowdfunding can take the form of loan (donation) or  investment.

Crowdlending platforms are those that offer loan/donation and crowdequity solutions those that offer investment.

Crowdfunding is a solution that allows project leaders, through the Internet, to bring natural or legal persons to participate in the financing of their project.

The principle ? It is a question for a project leader to borrow directly from contributors in exchange for remuneration, the amount of which will depend on the financial success of the project and the risks involved by investors.


Real estate investment

Real estate investment

What are the main types of crowdfunding of real estate?

Crowdfunding is an increasingly used solution for real estate investment. This form of financing is developing, in particular with the development of crowdfunding platforms (crowdfunding).

There are different types of participatory financing: the loan free of charge, the loan for a basis for donation, the loan of money Personal contribution Bond borrowing The shares and obligations The remuneration of the contributions in kind These methods of funding are Very interesting because they allow you to obtain a mortgage without having to go through the banks. This type of operation is however subject to certain constraints, such as the implementation of a legal assembly or the search for a joint deposit. Why choose real estate as a rental investment?


What are the factors to take into account before investing in crowdfunding of real estate?


Before investing in the crowdfunding of real estate, it is important to take into account the various factors that determine the profitability of your investment. Indeed, this operation is often done in the long term and is not without risks. To help you make a profitable real estate investment, here are some tips to follow: – The duration of mortgage: it is preferable to choose a short duration for a rental investment.

When you use crowdfunding, the maximum duration is 7 years. If you want to get more security and guarantee your project, it is possible to opt for a longer duration (15 years for example). – The price of housing: if you buy a property at the price of the current market, you can hope to obtain good profitability.

You can also use crowdfunding to acquire real estate which has not been for sale for a long time or whose price has greatly dropped following important work. – The location of the accommodation: study the general location of the good before considering any future acquisition.

It is important that its location is strategic so that future tenants can easily access it by car or in public transport. – charges related to the purchase of housing: do not hesitate to request quotes from companies concerning the charges inherent in the various works (change of boiler for example).


What are the advantages and disadvantages of mortgage loans compared to investments by crowdfunding of real estate?

Traditional mortgage loans are often associated with high costs and a risk of high interest rate, as they generally involve taking a mortgage on property. If this is not an obligation, banks may require higher interest rates than those requested by crowdfunding investors.

Crowdfunding investors do not pay additional costs for a traditional mortgage loan, but they have to pay commissions according to the investment they make. In addition, unlike traditional mortgage loans, crowdfunding investors are not granted a right of owner on the property in question. In addition, the own equity or quasi-ends required to finance a project via crowdfunding are often higher than the minimum amounts required to contract a mortgage loan. Finally, you may lose your investment if the borrower decides to sell the good before the end of the contract.


How can investors reduce the risks linked to investment in crowdfunding of real estate?

Crowdfunding of real estate is a form of financing that can allow you to invest in real estate.

Real estate crowdfunding, which results in the lever of crowdfunding, allows individuals and businesses to participate in the financing of a real estate project.

When investors participate in the financing of a real estate project, they contribute to the realization of this project.

They then become owners of real estate assets funded through real estate crowdfunding. This solution can be used for any type of project: renovation or new construction, student housing, social housing, etc. This mode of financing also allows everyone to invest according to their means. However, even if this solution offers various advantages (attractive yields), it also has some constraints for investors (risks linked to the market).


Are there alternatives to the crowdfunding of real estate?

Crowdfunding, or crowdfunding, is a method of financing which consists in raising funds with a wide range of people in order to finance a project. It presents itself as an alternative to banks for real estate project leaders.

In particular, it allows private investors to directly access real estate without going through the bank box. Today, crowdfunding does not only concern companies or startups but also real estate.

There are numerous crowdfunding platforms and offer various real estate projects: construction of social housing, renovation of old buildings … Real estate crowdfunding allows project leaders to use investors directly so that they finance their property in exchange for ‘part of the property or yield generated by it in the long term (rent).

The principle of crowdfunding is simple: it is enough that your property is offered on a specialized platform and that you collect funds from Internet users via different possible formulas (donation, amortizable loan, etc.) before delivery of the property to be able to access it. In this specific case, instead of having recourse to a traditional bank to finance its property, we call on this population already interested in investment and which can be interested in its return on investment.

Real estate crowdfunding is a very interesting tool for investors who wish to diversify. It makes it possible to diversify its investments by investing in real estate projects, in all regions and in all sectors (residential, commercial, industrial). With real estate crowdfunding you can finance various projects: housing renovation, real estate promotion, construction of public or private buildings.

If you don’t want to do that, there’s another option: real estate investment trusts !


N’oubliez pas non plus de consulter un conseiller en gestion de patrimoine ou un expert-comptable pour vous aider à optimiser votre investissement locatif.

En fin de compte, le but est de maximiser votre rentabilité tout en minimisant vos risques et vos contraintes. Alors, location meublée ou non meublée : quelle est la meilleure option pour vous ? La réponse dépend finalement de vous !

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