Investing in real estate is no longer only for large capitals. Thanks to real estate investment platforms, today anyone can participate in real estate projects from very low amounts.
But how exactly do these platforms work and what options are available? Let’s take a step-by-step look.
What is a real estate investment platform?
A real estate investment platform serves to connect investors with companies that develop real estate projects, such as developers.
These platforms act as intermediaries that facilitate real estate investment through small investments. Think of them as a marketplace of projects that the platform is in charge of sifting and evaluating to present only the most attractive ones from the most solid developers.
Most real estate investment platforms operate through crowdlending or real estate crowdfunding models, depending on whether they are more focused on lending to developers or participating directly in the capital of the development.
In essence, they allow you to invest in projects through small contributions. As an investor, what you do is lend money to the developer or become their partner to build with them, depending on the type of investment.
How do these platforms work?
The crowdfunding process usually follows these steps, although each platform will have its own particularities that must be evaluated:
- Project publication: the platform selects a project, reviews it and publishes it.
- Collective investment: users contribute money up to the minimum necessary.
- Project execution: the promoter uses this capital to develop the project.
- Profitability: upon completion, investors receive their share of the profit.
Each platform indicates the expected return, the term and the type of return: interest, rent or appreciation of the property.
However, like any investment, it is not guaranteed. That is why it is key to understand each project well before investing.
Advantages of investing in crowdfunding platforms
Investing through digital platforms has several benefits that have made them increasingly popular.
- From small amounts: you can start investing from 500 euros or even less.
- Diversification: allows the money to be spread over several projects and reduce risk.
- Easy access: everything is handled online, without paperwork or intermediaries.
- Transparency: many platforms report on the evolution of the project.
Disadvantages of investing in real estate platforms
It is also important to be aware of the potential drawbacks before starting to invest.
- Risk: as in any investment, there is no guarantee of success.
- Low liquidity: once the money is invested, it cannot be easily recovered.
- Uneven regulation: not all platforms are registered with the CNMV. It is key to review this point.
Real estate investment platforms
These are some of the platforms that are actively operating with projects in different areas and models:
| Platform | Type of investment offered | Highlight |
| wecity | Loans to developers, crowdfunding and crowdlending | We select only the best projects with the most outstanding developers. |
| Urbanitae | Crowdfunding and crowdlending | Demanding project selection and focus on large developments. |
| Housers | Loans to developers (crowdlending) | Investment in loans, not in direct participation in the project. |
| Civislend | Loans to developers | Exhaustive credit risk control. |
| Brickstarter | Profitability via tourist rentals | Specialized in tourism assets and short term rentals. |
| Inveslar | Varied projects: from rental to sale and purchase | Access to different strategies according to investor profile. |
How to choose a real estate investment platform
The market offers an increasingly wide range of platforms to invest in real estate. That is why it is advisable to consider certain aspects before deciding on one of them:
- Verify that it is registered with the CNMV. For example, wecity is registered as a provider of participative financing services under number 9.
- Check the published projects: what profitability they offer, terms, who is the developer.
- Evaluate their track record: number of projects financed, how many have been successfully closed, actual profitability levels.
- Consult reviews from other users, but always with criteria.
- Check their commissions: some charge for participation, others only if there are profits.
- Make sure it is intuitive and has customer support.
And the most important thing: diversify your investments. It is not advisable to concentrate all your capital in a single project or platform. This is the abc of investing.
Current trends in real estate crowdfunding
The industry is evolving fast. And these are some of the major trends that are transforming it:
- Blockchain technology: more and more platforms are exploring its use to ensure traceability, transparency and automation of payments through smart contracts.
- Increased regulation: there is an effort by European and national bodies to establish clearer frameworks for investor protection.
- Increasing competition: the entry of new platforms raises the level of demand and forces to improve the conditions and information offered.
The market is becoming more professional and everything indicates that this model will continue to consolidate as a real alternative to banking and classic real estate investment.
Traditional investment vs. digital platforms
Investing in a home to rent or sell is the classic way to enter the real estate market. But it has significant barriers:
- A lot of start-up capital is needed.
- You have to manage tenants, renovations, taxes…
- Selling is neither easy nor fast.
On the other hand, digital platforms allow:
- Start with little money.
- Delegate all management.
- Choose projects in different locations and with different strategies.
They do not replace traditional investment, but they do complement it, especially when it comes to getting started in a more accessible and uncomplicated way.
Should you invest in real estate platforms?
Real estate investment platforms allow access to the sector from small amounts and with professional projects. They are an interesting alternative to diversify and complement other investments.
However, they are not risk-free. Therefore, before taking the plunge, it is advisable to be well informed, to compare platforms and to start with caution.
Now that you know how crowdfunding works, done with planning, it can become a good way to generate passive income in the medium term.
