7 good reasons to invest in real estate crowdfunding

Today, making your money grow on a bankbook pays little. Playing with the purse strings is risky. But there is an intermediate investment! We give you 7 good reasons to invest in real estate crowdfunding.

1. A way to invest in the real economy

The real estate crowdfunding consists of lending money to developers to carry out real estate projects. It is a way to participate in the construction of infrastructure buildings, logistics or housing for individuals, students, couples or families. This is the opposite of speculation, which consists of taking advantage of market trends, with no link to the real economy, and controlled by large financial institutions.

2. A short-term investment

Do not confuse real estate crowdfunding and SCPI (Société Civile en Placement Immobilier). With an SCPI, the investor becomes the collective owner of a group of properties, managed by a management company, and receives a portion of the rents. This is not the case with a real estate crowdfunding project. The investor simply lends money to the developer in the form of bonds or debentures. As soon as the project is completed and sold, he gets his money back with interest. This is why the duration of the investment is on average 20 months.

3. A high return FOR REAL ESTATE CROWDFUNDING

The average return on a real estate crowdfunding project is 10% per year, but it can vary from 8 to 12% depending on the risk level. This means that, during the entire duration of the project, the investor receives 10% of his investment each year: this is the "coupon". This is a high return compared to the Livret A which is 0.5% or the SCPI which is rarely above 5%. It should be noted that one of the reasons for its high yields lies in the way the platforms operate: very few intermediaries between the borrower and the lenders (if any) unlike the large financial institutions.

4. An advantageous tax system

The "flat tax", which came into effect in 2018, has simplified the taxation of this type of investment. The single flat tax (PFU) applies to all capital income, with a fixed rate of 30%. A gross return of 10% will therefore give a return, after tax, of 7%. For example, for 1,000 euros invested, the net annual return will be 70 euros.

5. An accessible product

Thanks to real estate crowdfunding, investment is becoming more democratic, with a relatively low entry ticket. It all depends on the platform, but it is generally around 1,000 euros. All this without any costs for the investor. There is only one limit: the amount of the investment must not exceed 10% of the investor's assets, if the limits set by the declaration that must be completed before investing are respected.

6. Controlled risks

There is no such thing as a risk-free investment. But it is controlled in real estate crowdfunding if we are to believe the average default rate in France in this sector. The greatest danger is that the project will fail, because of a failure of the developer or a more global crisis that would prevent the developer from selling the property for example. The best way to find out how many projects have failed is to look at the default rate of the chosen platform. If it is 0%, no project has failed with this platform... and this is a good sign.

7. A great freedom of choice

The investor chooses the crowdfunding platform(s) he wants to use and, within that platform, which project he wants to invest in. He does not go through a management company as in the case of a SCPI for example. It is up to him to take advantage of this by selecting the right platform - with a low default rate - and the right project - with solid financing and significant guarantees.

Thanks to these 7 good reasons to invest, real estate crowdfunding has been steadily gaining ground since it first appeared a few years ago, with half a billion euros financed in France by 2020. While there is no shortage of reasons to invest, you just need to get the facts and make your choice before taking the plunge - bearing in mind that the key to limiting risk is to diversify your investments.

Discover our explanatory video on the 7 good reasons to invest in real estate crowdfunding