What is real estate crowdlending?

By referring to this new name, real estate crowdlending, we are referring to a trend in the investment sector. Therefore, any individual can have access to the brick with a minimal financial contribution. Through a series of real estate projects that launched certain platforms in charge of putting them into practice. In fact, it consists of investing in the real estate sector, but with the difference of not going to the financial markets. Not much less through the purchase and sale of shares in this professional segment. Whatever the case, it consists of a disruptive concept that can provide a profitability close to the 15%.

This investment is boosted by the good moment that the construction sector is going through in Spain, as has been seen in the latest data provided for this sector. Because in reality, the number of purchase and sale operations have increased in recent months. With more activity in the operations made and an increase in the price of the apartments. Both in terms of new construction and rental.

Capitals and large cities led the growth of house prices in Spain in 2017, with a year-on-year increase of 7.5% in December, compared to 4.5% of the national average, according to the monthly statistics IMIE General and Large Markets, prepared by the real estate valuation and advice company Tinsa. Average home values remain at November 2013 levels, with a cumulative fall of 38.6% since 2007. Confirming that it is a good time to return to brick as an investment option.

Real estate crowdlending, what is it?

This new investment system is driven by user interest in the brick sector. Through a double strategy on the part of the two agents involved in this procedure. On the one hand, the platforms that they arrange financing to go to these real estate projects without having to go to credit institutions. They will have greater savings for this concept by paying less interest for the liquidity that they will allocate to these projects. As a result of this trend, they are in a position to dedicate themselves to several projects of these characteristics.

On the other hand, there are small investors who can make more profitable their savings than what the different financial instruments offer them. Not surprisingly, profit margins are set between 2,50% and 14% in relation to. Whatever the case, with a higher interest than that offered by banking models (time deposits, high-income accounts, bank promissory notes, etc.). In all cases with returns that do not exceed the levels of the 1%. As a result of cheaper money from the European Central Bank (ECB).

With margins higher than equities

Real estate crowdlending also exceeds the profitability generated by the fixed rent. Not surprisingly, it should be noted that this investment is not going through the best of times as a result of the instability of the markets. On the other hand, it can also improve the performance of equities in several cases. To this end, it cannot be forgotten that the selective index of Spanish equities, the Ibex 35, appreciated by 8% last year, while most of the European benchmark indices did so around 13%. To this end, from the so-called real estate crowdlending, these margins can even be improved.

Whatever the case, the profitability of this new investment depends on the price of the house at all times. Therefore, it is a seasonal profitability since it will not always be the same over the years. In other words, in expansive scenarios in construction, it can lead to maximum levels of remuneration. While in recessive periods your interest can fall to the minimum margins, around 1% or 2%. To this end, it is very important to select when to invest in these real estate projects. Because a very relevant difference in profitability can be generated.

How are investments formalized?

If you are interested in investing your money in this class of real estate platforms, you will have no choice but to understand what the marketing procedure consists of. Well, first of all, the real estate platforms that are in charge of crowdlending advertise their projects through their web pages. Where all the characteristics of each project. From its peculiarities to the profitability that can be achieved. Without forgetting the duration of the project that they are going to carry out at all times.

Once a project attracts you, you just have to invest in it. It will have a term of duration and that at the end of it you will be able to recover the investment plus the corresponding interest. It is not contemplated no commission type nor other expenses in its administration or maintenance. Either way, it is feasible that the amount of the project is already covered through the collaborations of other small and medium investors who are in the same situation as you.

Information transparency

One of the biggest doubts that this special investment presents among potential investors is whether this system for monetize savings it is totally safe. Well, to ensure this function, you will have no other solution than to collect this information through the National Securities Market Commission (CNM). Not surprisingly, these collaborative platforms must send all their information to the Spanish regulatory body. Therefore, you should only operate with companies that are duly registered. Otherwise, it would be better for you to give up on carrying out your intention to invest money in these real estate projects.

On the other hand, it is true that at the moment there is not a strong presence of these platforms in the current real estate crowdlending offer. But at least, if you like to satisfy this special demand that you can welcome at any time in your life. They are mainly concentrated in the great capitals of the nation. As an example, in cities like Madrid and Barcelona above the rest. Because it is exactly in those localities where projects are developed where from now on you will be one more investor.

Performance in operations

Whatever the case, what will interest you most is the interest you can get through these operations in the real estate sector. They move under a very flexible strip that can get to 15%. A more than convincing reason for you to accept any of these proposals offered by the so-called collaborative platforms. Even though you must also look at the term of the operation. Because in effect, it can be from a few months to several years that you should receive your well-deserved reward.

It will be an interest that you will receive when the project expiration that you have chosen. As you can see, there are no equal returns for each of them. If not, on the contrary, they are presented with different actions, depending on their characteristics. Where one of the most relevant is the situation of the property since it will depend on this factor that it may have a greater or lesser interest.

Amounts to disburse

If something that real estate crowdlending establishes is because an investment can be made from only 50 euros. Adapted, therefore, to all national economies and as the main difference in terms of more conventional financial instruments. As a result of this contribution, it will not be necessary to make great financial efforts to invest in these projects. On the contrary, it does have a maximum limit that you cannot exceed at any time. Around 10,000 euros for each project awarded to you. It is perhaps one of the biggest drawbacks you have to accept their conditions: with very limited amounts in any of the cases.

While, on the other hand, you can choose between different types of real estate projects. Both in what refers to the acquisitions of real estate, as in the rental modality. According to your preferences in this important sector of the Spanish economy. Whatever the case, your financial contributions must come from your frequent bank account. As well as the refunds that you will receive at the expiration of the terms. On the other hand, they will be delimited before signing the operation with the collaborative platform.

Risks of operations

One aspect that you should pay attention to from now on is that these operations are not risk-free. To this end, one of the most accused is that there is no no fixed interest you can't even be sure from the start. On the contrary, it consists of commercial operations that are carried out by the laws of the market. With very strong oscillations in the interests that it can give you and it will depend on the moment in which you carry out the operation. Where the possibility will be the best news to defend your interests, since the difference may be greater than 20%. Therefore, it is advisable to select the most appropriate situation to formalize this investment.