In few years, only, crowdfunding has become a viable alternative to invest in new technologies, startups and now real estate.
A complete overhaul of our approach to real estate investing which is creating opportunities for investors, but not only. Every market participants and real estate developers in particular will benefit from the massive influx of funds generated by crowdfunding
Old age investing is over
Before the rise of real estate crowdfunding, investing in real estate was done in a simply manner through investment funds (OPCI, SCPI, etc.). However, investing directly in real estate development projects was much more complicated and involving high investment tickets. In practice, this means that these “private” opportunities were limited to investors who, not only have the financial ability, but also the right connections in their networks to find and participate in these much-sought operations.
Any investor willing to participate in a real estate development project had to raise beforehand the necessary funds to be able to invest. A 6 digits minimum investment ticket was often required before getting access to these opportunities. Real estate investing was elitist, restricted to a limited caste of wealthy and well connected individuals. This unfavorable framework was negatively impacting the opportunity to finance profitable projects, to generate real economic activity, to address the housing demand but also to create jobs (circa 1.8 FTEs per apartment built). Promoters on the other hand, had restricted capital access, constraining their capacity to develop new programs and buildings.
How crowdfunding is simplifying real estate investment.
Crowdfunding breaks down some barriers and allows any investor to benefit from high financial returns.Some European countries have chosen to legislate on crowdfunding, thus framing this new concept which redistributes the investment cards.
Thanks to crowdfunding, instead of having to find projects and investing 100’000 € or more, any investor has the opportunity to access dozens of real estate investment proposals as simply as one checks its Facebook timeline. This new phenomenon affects any type of investor, from the beginner to the most seasoned one who used to search for a long time before finding the right opportunity.
Finally, most these opportunities are available from € 1,000. Thus, with 10’000 €, you can build a portfolio of 10 projects well diversified across the nature of the construction (commercial or residential), the geographical location, the type of promoter and many other selection criteria. Since 2014, several hundred million euros have been invested in real estate projects via crowdfunding. Will you follow the crowd or rather take the risk to be left behind this investment (r) evolution?