Real estate and crowdfunding

by Realigro Team On 03/06/2020

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Can real estate and crowdfunding be tied together? The answer is more positive! In fact, our mini guide today will be based on the relationship between real estate and crowdfinding. We will then start with a detailed analysis of the concept of cowdfunding and see how it can be applied in real estate. Both at European and American level. So, if you are also ready to dive into our blog today, we can inaugurate our mini column. Signed Realigro , of course !

Crowdfunding : what is it ?

Let’s start with the definition of crowdfunding. What is meant by this term ? Crowdfunding is a collection of contributions, tending towards the Internet. The purpose is to raise funds for the achievement of the same interest, such as a common project or an innovative idea.

There are different types of crowdfunding. Among these we remember the following models :

Reward : provides a sort of reward established upstream by the donor for those who decide to make a donation. It can be proportional to the contribution or simply symbolic.
Donation : a donation in money that does not foresee an economic return, made by the investor (and therefore financier) of the project. The motivation is therefore philanthropic in nature.
Lending : The most widely used model allows to collect money through digital platforms.
Equity: as the term itself says, it is based on equity between the participatory instruments, the risk of the financial project and obviously the rights that derive from it.

Real estate and crowdfunding: the union

But then, how is it possible to unite these two areas? To be more precise, we can say that real estate crowdfunding is a real form of crowdinvesting. It allows the various actors to finance a project, which is linking to one or even more properties. It can therefore be adopted both for new buildings, but also for projects dedicated to redevelopment. But what are the advantages of this technique ? Without a doubt, crowdinvesting allows the real estate sector to drastically reduce potential investment risks. Participation in the crowdinvesting system is essential for those who wish to achieve a specific objective, which, however, involves the use of capital that is far too high.

Europe and the United States in real estate crowdfunding

But how has this participatory model evolved in the real estate sector? It is good to examine both the European and the American context. Real estate crowdfunding was born for the first time in the United States, thanks to the launch of digital platforms in 2012. In Europe, on the other hand, it arrived
Only in 2019, with a total number of platforms, however, higher than those in the United States.
The leader in the sector is Germany, followed by the United Kingdom, Switzerland and France, which raised 393, 391 241 and 197 million euros respectively.

And you, are you interested in a real estate project where crowdinvesting could prove useful?