Whether you are weighing up making your first investment in real estate crowdfunding or you are already a total expert, it is good to be aware of both the advantages and risks of these kinds of transactions.
What should you take into account before investing in a real estate crowdfunding opportunity?
The first thing you need to be clear about is that there are no risk-free investments. However, the risks of these kinds of collaborative investments are significantly low, since projects tend to be located in high-return areas: neighbourhoods in major cities where property prices have consistently tended to rise.
Also, the entire process (from making an investment to return of the capital) is controlled and regulated by the Bank of Spain, the Spanish Securities and Exchange Commission (CNMV) and Act 5/2015 of 27 April, which regulates crowdfunding platforms.
Among other aspects, these regulations divide investors into two groups: accredited investors (more professional or more experienced) and non-accredited investors (all others), who can only invest a maximum of €3,000 in any one project and up to a total of €10,000 per year in a single real estate crowdfunding platform.
What are the advantages and disadvantages of real estate crowdfunding?
Now that we have seen that this is a regulated and secure investment alternative, we will now analyse the main advantages and disadvantages of real estate crowdfunding.
- Real estate crowdfunding offers high returns.
- Small investments can be made (from just €100 with PropCrowd).
- The investor can invest in the opportunities that best suit his/her interests.
- Investments can be conveniently made through the internet on your sofa at home.
- The investment periods and returns are short-term (approx. 12 months).
- This is a growing, fully-regulated and secure trend.
- The real estate market is changeable and property sale prices can fluctuate upwards and downwards.
- The success of an investment opportunity depends largely on there being a professional and skilled company and a team of experts behind it.
- All real estate crowdfunding companies are monitored by the Bank of Spain, but not all of them are approved by the CNMV or operate in association with one of the authorised crowdfunding platforms.
How can you make a smart investment?
To invest in real estate crowdfunding opportunities while minimising the risks it is essential to entrust your savings to a company that is an expert in the industry and also has the capability to carry out the project from start to finish. A company such as PropCrowd, which is backed by the estate agents Forcadell, which have more than 60 years’ experience in the property sector, and operates through Socilen, a crowdfunding platform accredited by the CNMV.