Real estate crowdfunding: A risk free investment?

Real estate crowdfunding, or real estate crowdfunding, first appeared in France in 2016. This process enables crowdfunding to build or acquire real estate, through an online platform. This trend underlines a desire to open up the world of finance to the "general public", where the internet now makes it possible to invest and buy shares with a simple mobile application.

Real estate crowdfunding has met with great success in France since its launch. There are more than twenty platforms entirely dedicated to this type of investment. This success is explained by extremely high rates of return (between 12 to 15%). Another advantage is that it is a short-term investment. In addition, real estate crowdfunding does not require too large sums to invest (the average ticket is around 1,600 euros in 2021), which could open the investment market to young workers who have been able to build up savings.

But what is crowdfunding? A project leader, most often a real estate developer, finances part of a program by calling on private investors, who will lend him money. The promoter guarantees them a repayment of their capital on a fixed date and promises a possible profit. This process makes it possible to finance different types of real estate transactions, such as construction, but also renovation, life annuity or rental.
It can also allow the project leader to avoid or at least reject a loan application from a bank branch.

Crowdfunding platforms select real estate programs offered by developers. They are responsible for studying the financial capacity of the developer, determining whether he already holds a building permit, or even proving the existence of a completion guarantee. This sorting allows future investors to avoid a lot of research work and allows easy access to the world of investing.

Real estate crowdfunding platforms therefore seem to be the safest way for savers wishing to invest in real estate and quickly obtain an above average return. The fact that this investment is completely dematerialized also presents very few constraints for future investors.

Although crowdfunding appears to have survived the health crisis, it is important to remember that no investment is 100% safe. Any real estate investment comes with risks, especially since crowdfunding is a recent investment method. It is important to remember that the profitability of an investment depends on the success of the real estate project. In particular, if you are interested in this investment, take the time to research the promotion company and be aware that delivery delays on housing are possible. Although this is rare, we cannot rule out the failure of a project. In particular, cases of bankruptcy of the promotion company, or even of the crowdfunding company itself have been identified, moderating the perceived benefits of this investment.