Trend to discover: real estate crowdfunding

Have you ever heard of “crowdfunding” or “crowdfunding”? After music, cinema or even comic books, this relatively recent financing system is entering the real estate sector. What exactly is it about? How does real estate crowdfunding work? What are the risks? What platforms can you trust? Here are answers to these questions as well as some tips.

What is “crowdfunding”?

“Crowdfunding”, translated into French by the term “participatory financing”, is a new way for companies and others to raise money in order to finance this or that project.As a general rule, interested people invest a small amount and it is the addition of these multiple amounts that will make it possible to raise the funds necessary to finance the project.But more than participatory financing, crowdfunding makes it possible to unite a large number of people around of a project.It should be noted that funds may be allocated from four different ways: in the form of a donation: a person — natural or legal — gives a sum without expecting anything in exchange. Associations, for example, can opt for this type of financing for various projects (trips, construction of a reception center, etc.); in exchange for a reward: a person — natural or legal — gives a sum, a donation for which they are rewarded. In music, for example, you can help a young artist release an EP. Depending on the amount you pay, you can receive, in exchange, the signed EP or even an invitation to a concert.in the form of a loan: a natural person lends a sum that will be returned to him with or without interest (decision specific to the project owner); according to the principle of “equity crowdfunding” or participatory investment: a person — natural or legal — invests a sum in a project in exchange for the acquisition of shares in the financed company (directly or indirectly).

Real estate crowdfunding: what is it?

Co-financing a real estate program or making a rental investment with several people? That's what real estate crowdfunding offers. But how does that happen exactly? On the one hand, there are real estate developers who need money to finance their program (building, subdivision with individual houses...). On the other hand, there are retail investors looking to boost their savings. Finally, at the center, there are real estate crowdfunding platforms that make it possible to make the link between the two parties.If all goes well, the saver can expect an annual return of 8 to 12% (before taxes) for a minimum bet of 500 to 2,000 euros over a period of one to three years over a period of one to three years.Several types of arrangements exist for real estate crowdfunding: via a holding company that takes shares in an SSCV (Société Civile de Construction Vente), via an issue bond on the holding company that owns all or part of an SCCV or even via an issue bond for an SAS (simplified public limited company) .Presented in this way, this system can make you dream, but you have to be careful, because risks exist. It is possible that various professionals involved in the project go bankrupt, that the initial budget increases for various reasons or that the homes do not sell. The saver may therefore see his profitability reduced and he may also, in the worst case, lose his capital.

Tips for real estate crowdfunding

As we explained to you, real estate crowdfunding is not without risks. Also, some precautions should be taken.Above all, make sure that the platform you are using does everything possible to limit the risks mentioned above.Likewise, be sure that it carefully selects its promoters and that it is certain that the program in question will really see the light of day.Also note that the investment should preferably be made, via an SAS. Thus, for investors, the risk of losing the amount bet at the start is limited.Finally, check that the platform is regulated and has the status of a CIP (crowdfunding advisor) .You can, for example, trust Anaxago Immobilier, Lymo, Wiseed or Canberra Immo.

Why are investors attracted to crowdfunding as a way to diversify their savings?

Real estate crowdfunding appeals to investors looking for a diversification solution for their savings, motivated by several undeniable factors. First of all, the downward trend in interest rates for bank accounts and life insurance over the past few years has made these investments less attractive for savers, encouraging them to explore alternatives to optimize their returns.

Real estate, especially rock-paper, is a preferred choice thanks to its generally high returns. Investors can expect returns ranging between 4 and 5% by opting for rental properties or by investing in certain Real Estate Investment Companies (SCPIs). However, these options often require substantial capital and in-depth real estate expertise.

In this context, real estate crowdfunding is an attractive alternative. It offers investors a financial investment, often in the form of bonds, backed by real estate. The estimated annual returns offered by real estate crowdfunding can reach peaks of 8 to 10%, thus greatly surpassing the current rates for bank accounts and life insurance.

In addition, real estate crowdfunding offers a range of substantial advantages. It allows portfolio diversification by allowing investors to participate in different real estate projects, thus mitigating the risks associated with excessive concentration of investments. In addition, it democratizes access to real estate opportunities, even for investors with more modest financial capacities. Thanks to crowdfunding platforms, investors can get involved in large-scale projects that they would probably not have had access to otherwise.

In summary, real estate crowdfunding appeals to investors as a diversification solution for their savings, drawing its strength from attractive projected returns, its ability to diversify real estate investments and its ease of access to real estate market opportunities.

Real estate crowdfunding is a crowdfunding solution

Real estate crowdfunding, emerging from 2014 following the regulation of participatory finance, represents a form of crowdfunding allowing investors to contribute financially to various real estate projects. This practice has grown with the regulation of participatory finance, which also includes aspects such as crowdlending and crowdequity.

The real estate crowdfunding mechanism is based on the mobilization of investors who provide financial support to real estate projects, often via specialized online platforms. These projects may include the acquisition of real estate, renovation work, new construction, or even the financing of commercial projects such as residential complexes or office space.

The general framework for participatory finance has encouraged the development of real estate crowdfunding by offering an alternative to traditional investment schemes. Now, investors have the opportunity to diversify their portfolio by investing in real estate projects that were previously inaccessible or reserved for major market players.

Since 2014, real estate crowdfunding has recorded significant growth, attracting a multitude of investors and real estate developers. Specialized platforms have emerged, offering transparent and attractive investment opportunities. The advantages of this approach lie in the ease of access to the real estate market, the attractive potential returns, as well as the possibility of diversifying risks by investing in a variety of projects.

In summary, real estate crowdfunding is a form of crowdfunding that allows investors to contribute financially to real estate projects. Its development since 2014, fuelled by the regulation of participatory finance, offers an attractive alternative to traditional investments and is an opportunity for investors to diversify their portfolio.

How does real estate crowdfunding fit into short-term savings strategies?

Real estate crowdfunding is a particularly consistent part of short-term savings strategies for a variety of reasons. Although it has a slightly higher level of risk compared to traditional bank accounts, it is of great interest among individuals.

In our society focused on immediate results, real estate crowdfunding cleverly meets this requirement. By allowing investors to take part in various real estate projects, it offers an opportunity for rapid diversification. This allows individuals to quickly make a substantial personal contribution, which is particularly useful for preparing a mortgage.

This type of investment is also an attractive option for those looking to increase their savings in the short term. Real estate projects offered through crowdfunding often have a relatively short duration, offering investors the opportunity to quickly recover their funds once the project is completed. This characteristic contrasts with other forms of savings where funds can be locked in for a longer period of time.

In addition, real estate crowdfunding opens the door to participation in large-scale real estate projects that investors would generally not have access to. This approach allows for an even greater diversification of their investments, thus increasing the chances of obtaining attractive returns in the short term.

What advantages do individuals find in real estate crowdfunding compared to traditional bank savings accounts?

Individuals are discovering several advantages in real estate crowdfunding compared to traditional bank account solutions. First of all, in a world where instant gratification is emphasized, real estate crowdfunding is a perfect fit for short-term savings strategies. Individuals are attracted by the higher return potential that real estate crowdfunding offers compared to traditional bank books.

Over the last decade, interest rates for bank passbooks have fallen considerably, making these products less attractive in terms of return for French savers. For example, the famous Livret A currently offers a rate of return of only 0.75%. Likewise, some preferred investments such as life insurance have also seen their rates decrease, with an average difficult to exceed 3%. Faced with this constant drop in returns, individuals are looking for diversification solutions for their savings, while taking into account their expectations and their financial capabilities.

In this context, real estate crowdfunding offers an interesting alternative. By investing in real estate, especially in real estate projects via crowdfunding, individuals can expect generally higher returns. Indeed, returns of 4 to 5% in terms of rental return or for certain Real Estate Investment Companies (SCPIs) are common. In addition, real estate crowdfunding offers financial investments (in the form of bonds in most cases) backed by real estate, thus offering additional insurance.

Is it possible to get a mortgage without a down payment?

Embarking on the adventure of a mortgage without a down payment is entirely possible, but you should keep in mind that banks examine every detail of your file before giving their verdict. Here are some smart tips that could increase your chances of getting that precious loan without a down payment.

First of all, it is crucial to present a solid and well-prepared case. Banks value transparency and clarity, so make sure all the required supporting documentation is in order. Prepare a detailed list of your income, monthly expenses, and any other relevant financial items.

Second, demonstrate your ability to manage your finances responsibly. Good account management, a lack of frequent overdrafts, and a history of regular payments can work in your favor. Banks seek to minimize risks, and sound financial management is a guarantee of trust.

It may also be useful to seek the help of a real estate broker. These professionals know the market and have the necessary experience to present your case in an optimal way. Their expertise can make a difference and increase your chances of getting a loan without a down payment.

If you have a credit history, be sure to clearly explain it in your file. Sometimes past events can affect your credit score, but an honest and well-argued explanation can show that you have overcome these challenges and are now financially stable.

In summary, getting a mortgage without a down payment requires careful preparation and a thoughtful approach. By following these tips and by presenting a complete and transparent file, you maximize your chances of convincing banks to provide you with the financing you need to carry out your real estate projects.

Is it advantageous to open a Housing Savings Plan in 2023?

Starting to open a Housing Savings Plan (PEL) in 2023 may raise questions about its real advantage. However, to answer this critical question, let's explore several key elements together.

First, the PEL is undeniably attractive thanks to its interest rate that is often more attractive than that of simple savings accounts. However, keep in mind that this rate may fluctuate according to Banque de France's decisions on key rates, which can influence the profitability of your savings.

In addition, the PEL offers significant tax advantages. The interest generated by this plan is exempt from income tax until the twelfth year, a valuable asset for savers who want to minimize their tax burden.

Nevertheless, it is imperative to consider some limitations and conditions associated with the ELP. The maximum savings limit on a PEL is set at 61,200 euros, and the life of the plan is limited to 15 years. In addition, the use of PEL funds is mainly intended for the acquisition or renovation of a home, which may restrict withdrawal options.

It is also crucial to highlight that economic and market conditions may influence the relevance of the PEL. In 2023, predicting with certainty the evolution of interest rates and real estate investment opportunities remains difficult.

In conclusion, opening a PEL in 2023 could be advantageous thanks to its attractive interest rate and the tax advantages it offers. However, it is essential to carefully assess your financial goals, liquidity needs, and explore available investment alternatives before making a decision. In this process, the advice of a professional financial advisor can be invaluable in determining whether the PEL corresponds to your personal situation and financial aspirations.

What is the right down payment for a rental investment?

Determining the ideal amount of contribution for your rental investment project is a crucial step, and this assessment must take into account various elements specific to your situation. The parameters to consider include your financial situation, your investment goals, the type of property you are considering, as well as the conditions of the local real estate market.

The contribution, defined as the amount of money invested personally in the purchase of the property outside of mortgage financing, is of strategic importance. It is generally recommended to contribute a substantial amount when buying a rental home. A large down payment offers several benefits, including a reduction in the total mortgage amount, a reduction in interest costs, and a better probability of obtaining an advantageous mortgage.

However, the optimal intake amount depends on your personal goals. Some may prefer a larger contribution to reduce their monthly mortgage payments and reduce their debt ratio. Others, on the other hand, may prefer to minimize their initial contribution in order to maintain cash flow for other real estate investments or face unexpected expenses.

It is crucial to consider associated costs, such as closing costs, taxes, and any repairs required to the property. These costs fluctuate depending on the location of the property and its general condition. Integrating these additional costs into your contribution calculation ensures that you have enough funds to cover all expenses related to your rental investment.

Consulting with a real estate professional, such as a financial advisor or mortgage broker, may be a good idea. Their personalized advice will help you assess your financial situation and determine the amount of contribution that best suits your specific needs and goals.

When is the right time to start a project?

Choosing the right moment to bring your project to life depends on multiple factors that should be carefully considered. First and foremost, it is imperative to analyze market conditions and trends. Conducting thorough research on your target market, including identifying your potential customers, competitors, and their strategies, is a valuable source of information.

In addition, a thorough evaluation of the financial aspect of your project is necessary. Scrutinizing your budget, obtaining adequate funding and developing a realistic financial plan are all crucial steps in ensuring the resources you need to launch and maintain your initiative.

In addition, determining the right time to launch your project by taking into account external factors, such as economic conditions, sectoral events or upcoming technological advances, can have a significant impact on its success. For example, if your project is in the technological field, launching it when a new technology or innovation is about to disrupt the market can be beneficial.

In addition, the internal preparation of your project is of crucial importance. This includes ensuring that your team is properly prepared, trained, and equipped to meet launch challenges. Setting realistic goals, setting clear deadlines, and having a well-defined road map can also help your project run smoothly.

Ultimately, the right time to launch your project comes from the favorable combination of a thorough analysis of market conditions, the assessment of the financial situation, the understanding of industry trends, and internal preparation. Although there is no universal answer to this question, carefully considering these factors, combined with a well-developed strategy, can greatly increase your chances of success when launching your project.