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All about real estate crowdfunding

AUGUST 13, 2019 | PROPOSED BY OUR PARTNER ING LUXEMBOURG

Appeared in the United States ten years ago, crowdfunding is a technique that consists of raising funds directly from Internet users via online platforms. dedicated. This form of crowdfunding, whose principle dates back several centuries, covers different forms of financial relations: from pure donation without consideration until the acquisition of shares in a company in phase of capital increase. Today, he seduces more and more the real estate sector. The crowdfunding real estate market is already worth billions of dollars across the Atlantic and the billion pounds has been exceeded in England. But what exactly is real estate crowdfunding and what do you need to know before you start? ?

An interesting alternative ...

The real estate crowdfunding allows developers to finance real estate programs (construction, renovation, acquisition) thanks to the contributions of private investors. All stakeholders are in principle winners. The promoters see their own funds fed, in addition to or not a loan granted by the bank. Individuals benefit from a short-term investment opportunity (from 12 to 24 months) with high rates of return, generally between 8 and 12%. The internet platform on which the whole procedure is run is charged a commission for each investment project.

There are two main types of real estate crowdfunding : crowdfunding loan (crowdlending) and crowdfunding investment (crowdequity). In the first, investors lend money back as and when with or without interest. In the second, investors place money in the capital of a company, or subscribe to a bond, and are repaid in fine.

Real estate crowdfunding is an interesting way for the individual to diversify their wealth . It is a full and complete activity serving the real economy, has no management fees and is relatively accessible (the entry ticket generally varies between 1,000 and 10,000 euros).

In addition, its use is very simple. All you have to do is register on a real estate crowdfunding platform , choose the project that seems most promising, invest and follow your investment. The realization begins when the necessary sums have been collected. Once the housing is sold, you recover your interest in relation to your investments.

... but not free of risks

If the concept seems tantalizing on paper, it is quite different in reality. Real estate crowdfunding is certainly on the rise in the United States, the Netherlands, the United Kingdom, France and, to a lesser extent, Belgium, but this is far from the case in Luxembourg . Projects are confidential or non-existent, and there is currently no truly active platform in the country.

In addition, the return is not guaranteed and you can even lose all of your capital . Even if you invest in a project located in Europe where the potential of attraction remains very high thanks to the radiation of its big capitals and its cities, this one can very well not be born. Real estate crowdfunding remains a risky investment.

There is also the problem of controlling the proposed projects . At present, the credibility of the promoter and the project rests almost entirely on the sole analysis of the crowdfunding platform. How do you know if your job is doing its job properly and how demanding it is?

Not to mention the fact that there is still no regulation common to all EU countries in terms of crowdfunding real estate. Thus, you could very well participate in the financing of a project in Belgium without being sure of being able to benefit, like your Belgian neighbors, from the same tax exemption.

To summarize, crowdfunding real estate can pay big but beware of disillusionment! A savvy investor is worth two.

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