Real estate crowdfunding: everything you need to know about participative investment

Real estate crowdfunding, also known as participatory real estate financing, is a relatively new investment method that enables individuals to finance real estate projects by pooling their capital via an online platform such as Raizers. This innovative approach democratizes access to real estate and offers potentially attractive returns.

How didreal estate crowdfundingcome about?

Real estate crowdfunding emerged in the early 21st century as an innovative alternative to traditional real estate financing. Its origins can be traced back to the United States in the 2000s, when online platforms beganallowing large numbers of people to invest small amounts of moneyin larger real estate projects.

This model is based on the principle of raising funds froma wide range of investors, both private and professional, thus eliminating the need for a property developer to rely solely on financing from traditional financial institutions.

Real estate crowdfunding offers investors the opportunityto access a diverse range of real estate projectswith relatively low investment thresholds. Developers, for their part, benefit from analternative source of financingand can achieve their financial goals more easily and quickly. This collaborative approach has since gained popularity in many countries, with dedicated platforms emerging around the world to facilitate these participatory investments in the real estate sector.

How does real estate crowdfundingwork?

Real estate crowdfunding allows individual and professional investors tocontribute to real estate projects listed on a real estate crowdfunding platform. This provides access to financing for large-scale projects that are typically reserved for institutional investors. In return, investors receive interest at a rate set at the time of investment.

The real estate crowdfunding platformserves asa bridge between real estate operators (developers or property investors) and investors. It selects the projects it will present following a thorough analysis of both the project and the project sponsor, conducted by an audit team. It will present only those projects that meet the financing requirements and strike a balance between the risks identified during the analysis and the guarantees provided.

 Attractive returns

With an average return of around 10%*, crowdfunding is one of the most attractive financial investments available. One of the reasons for this high return is that the bonds issued enable promoters to raise large sums of money quickly. This money is then used to build up equity and borrow money from banks at low rates. This loan is inevitably more expensive than a bank loan, as repayment is subordinated to the latter... but this benefits both investors, who make an investment with a relatively high return, and developers, who can carry out profitable operations and develop their business.

However, real estate projects may be subject to unforeseen delays due to permitting problems, weather conditions, construction difficulties, etc. These delays can result in additional costs for operators and affect the expected return on the operation, although Raizers realizes a mark-up on the rate applied to late interest.

Real estate market conditions can influence project profitability. Market variations, economic changes or crises can impact the demand, value and profitability of real estate.

* Past performance is no guarantee of future results.

Personal surety

A personal guarantee is a financial commitment made by a person (the guarantor) to guarantee repayment of a debt contracted by another person or entity (the principal debtor). In other words, the guarantor undertakes to reimburse the creditor if the principal debtor is unable to meet his or her financial obligations.

There are several types of surety, and the personal surety is one of them. A personal guarantor uses his or her own assets and financial resources to guarantee the principal debtor's debt. In the event of non-payment by the principal, the personal guarantor may be called upon to repay the debt.

First Demand Guarantee

A first demand guarantee enables the beneficiary to demand immediate and unconditional payment in the event of non-compliance with the terms of the contract. The guarantor must perform without being able to defer payment, or raise any objection, exception or dispute relating to the basic contract or the guaranteed obligation.

Steps for investing on the Raizers platform

To invest on Raizers, you need to follow a number of steps that take just a few minutes:

1. Enter your contact details (surname, first name, email address and telephone number) on the registration form.
2. Fill in your personal details (address, nationality, country of tax residence, etc.).
3. Upload the supporting documents needed to validate your profile (ID and proof of address).
4. Complete the investor profile questionnaire.
5. Credit your account and start investing in our operations.

It is crucial for investors to perform due diligence, understand the specific risks of each project, diversify their investments and choose reputable real estate crowdfunding platforms. A thorough understanding of the terms and conditions of each project is essential to minimize the risks associated with this type of investment.

If you're a saver looking to diversify your financial investments and want to commit to short-term profitability, then the rigorous selection of programs offered by Raizers represents a suitable alternative. Our approach? To offer you the opportunity toinvest in carefully analyzed and selectedreal estate programs, and to ensure that your capital is returned to you on the date specified by the project owner, plus the interest earned on the real estate transaction. Thanks to our participative real estate financing site, you now have the opportunity to invest in large-scale projects in line with your return prerogatives, your investment capacity and your ability to mobilize your savings.