Real estate crowdfunding is gaining prominence in Spain. In this post we analyze this alternative financing model and show the advantages that have positioned it as one of the formulas most used by developers of real estate projects.
How does real estate crowdfunding work in Spain?
crowdfunding It is a participative financing model that can be applied to multiple types of projects, from companies to art.
However, due to the boom in real estate investment in Spain, this formula has become one of the main financing alternatives for real estate projects, either new construction, reform, lease and subsequent sale; regardless of the size or scale of the initiative.
It's about a system of "microinvestments", in which private savers have access under the same conditions as large capital firms. It is a formula based on the sharing economy, where investors obtain some benefit or reward for the savings invested.
In the case of crowdfunding for real estate projects, the model of “crowdlending”. That is, the capital is invested in the form of a loan to the project and generates interest in favor of the borrower. The principal borrowed is returned at the end of the life of the loan, as indicated in the contract.
In order for a real estate project to be made known to the public and its terms to be completely transparent, it is necessary to mediate a crowdfunding platform or a financing company acting as an intermediary.
What are the advantages of real estate crowdfunding?
Advantages of real estate crowdfunding for the investor
For the investor, among the greatest advantages is the possibility of taking exposure to real estate projects with minimal capital. Crowdfunding is based on small-scale investment by a large number of agents.
In the same way, investors have all the information at their fingertips to carry out an assessment and monitoring of the project thanks to real estate crowdfunding platforms in Spain, which also offer due security and transparency.
Moreover, the projects offered have been audited to determine their quality. The investor is not required to have great technical knowledge of the sector, nor complex procedures to formalize the investment. Therefore, it is useful to start gaining experience in this area.
Likewise, by having the ability to invest small amounts of money in a single project, the investor can form a diversified portfolio with various initiatives of a different nature (residential, commercial, etc.), geographical area and model of obtaining returns on investment ( sale, rent, new construction, etc.)
Advantages of real estate crowdfunding for the project promoter
Besides, facing the promoter, has the Possibility of accessing alternative financing to the bank financing model, getting funds faster due to the simplicity with which investors access.
The bank route is always open and can be used as a complement, perhaps to make use of it in the last phases of the project. In other words, the real estate developer maintains flexibility in terms of the options available to him.
All this without taking into account that real estate crowdfunding itself is a source of visibility and marketing for the project itself. The ability to get customers is increased.
How to launch a real estate crowdfunding in Spain
As part of our commitment to seek effective financing solutions adapted to the needs of our clients, from Alter Finance we offer alternative formulas among which is the crowdfunding model.
To launch a real estate crowdfunding project with the capacity to attract investors, it is necessary to carry out a thorough feasibility analysis and improve quality factors. Subsequently, the launch and marketing plan can be carried out in the best conditions.