Real Estate Investments, A Good Option?
What real estate investments get better returns in the medium term?
When we have already made the decision to invest, one of the most common doubts that hits us is, what will be the best investment option that will offer the most profitability with the least risk? Without a doubt, this is the million-dollar question.
We would like to guide you in your decision by highlighting some real estate investment options that can be very attractive and a very good option where to deposit our capital.
What are real estate investments?
If we are new in this market, the first thing we should understand is the concept of real estate investments.
What is a real estate investment?
A real estate investment can be defined as occurring when we allocate a part of our capital to the purchase of real estate or a part of it (real estate Crowdfunding), with the objective of selling it in the future for an amount greater than what we paid for it or to obtain returns from leasing the property. Real estate is “real” because it cannot be transported from one place to another, due to its characteristics. It should be noted that these assets are also known as real property or real assets. Lands, finished buildings, buildings under construction, or mines are some examples that are considered to be real estate.
Currently, cities like Madrid or Barcelona, have very attractive real estate in the eyes of investors; however, this also causes an imbalance between the supply and demand, as there are not enough assets for the powerful number of domestic and foreign investors interested in investing in this sector in our country.
This leads to a rise in prices, in rents as well as sales, which results in lower profitability of assets.
Crowdfunding: one of the most recommended real estate investment alternatives
Inside the sector of real estate and thanks to a union of new technologies with financial markets (Fintech), a new investment alternative was born inside the sector of brick and mortar, real estate Crowdfunding.
It is an innovative form of investments within real estate that does not have to involve a large disbursement of money. That is to say, it can be suitable for all pockets since it allows investment contributions as low as 50€ per project.
It has never before been possible to invest in this sector, much less with these amounts without an accreditation of professional investor.
How does one invest in real estate Crowdfunding?
Today there are multiple platforms for real estate Crowdfunding that, through a digital storefront, present the different collaborative investment projects in real estate that are available in real time. Before promoting any project, a team of professionals working for the platform carries out studies of profitability and the marketplace. The projects will be manifold; they can be buildings, commercial locations, homes, offices, the construction of a hotel, etc.
Steps in the real estate investment process through Crowdfunding
1️⃣ First the investor must register in each platform in which he wants to invest, performing the so-called KYC (know your customer) process.
2️⃣ The investor chooses among the different projects available on the platform and transfers the necessary funds.
3️⃣ Once the acquisitions are made, they will become owners of the economic rights of the asset (usually conveyed through a loan or shares in a company) together with the other investors in the project.
4️⃣ The assets under investment will be refurbished and may be rented with the objective of recovering the capital invested at the beginning.
5️⃣ The assets will be sold at the right time when their revaluation is optimal, thus obtaining the capital gain or profit from the investment.
💡 IDEA: you already know that if you want to avoid the cumbersome process of having to register on different platforms, you can make a single registration in Brickfy and invest comfortably in a centralized way from our platform!
Why bet on real estate investments?
If we analyze the data that we showed at the beginning of this article, we see that the figures are more than desirable. Additionally, thanks to the arrival of real estate Crowdfunding platforms, we can invest in “bricks” without the necessity of being accredited investors, something unthinkable until now.
Guarantee and confidence of a real estate investment in Crowdfunding
Behind each real estate Crowdfunding project there is background work that includes analysis, procedures, and all types of studies that will verify the viability of the project.
The Crowdfunding companies carry out all these tasks in exchange for a commission that is usually applied to the benefits obtained during the investment in such a way that the investor will only have to worry about choosing the project or projects that they want to participate in.
Limits and Regulations on Crowdfunding as real estate investments
They range depending on if we are professionally accredited investors or not. Crowdfunding platforms are regulated (in Spain) by Law 5/2015 on Business Financing that establishes some limits based on the investor’s profile.
For investors that are not accredited:
The maximum quantity that can be invested per project is 3,000€
They cannot invest more that 10,000€ annually on different collective Crowdfunding platforms, for example Crowdlending (loans financed collaboratively through digital platforms).
For accredited investors
For accredited investors (legal entities holding assets with a value of at least 1 million euros, turnover of at least 2 million euros and a minimum amount of 300,000 euros in its own resources), there is no investment limit except that projects may not exceed the amount of 5 million euros.
Are there safe real estate investments? Safety vs. Profitability
As we commented before, the real estate sector is becoming increasingly attractive as far as investment capital is concerned because, given the low interest rates that move in the banking market, investments in fixed income (deposits, bonds, letters of the State, or savings accounts) have remained pushed to the background.
On the other hand, the continuous fluctuations in the stock market make the return on investment unpredictable, so that not all investor profiles are willing to assume this high risk.
No investments in the real estate sector are 100% secure, nor in any other sector, since the concept of investment in itself carries an implicit risk. However, an investment becomes much safer as the likelihood to recover the invested capital increases.
On the other hand, the more risk we assume, generally, the more profit we can obtain.
Let’s give an example:
The same risk is not implied when investing in a home that is real property that satisfies a basic need for any person, as when investing in a commercial location, since the success of the latter ultimately depends on multiple variables, the fundamental being the applied business model.
How does one deal with real estate investments with the least possible risk?
There is only one answer to this question and that is diversification. Do not lay all your capital down on only one asset. As the saying goes:
"Don't put all your eggs in one basket."
Create a portfolio comprised of different projects and various real estate investments, dividing the risk between each of them. How does one do this?
Brickfy offers you the solution
Brickfy is a digital platform that acts as an aggregator of different platforms, allowing you to diversify and manage your real estate crowdfunding investment portfolio comfortably from a single website.
And you already know that in addition to crowdfunding real estate investment, we also offer different alternative investment options such as crowdlending, loans, NFTs and much more.
1.Assess all your possible real estate investments in a single platform
You will be able to access the information and data of all the possible investments in real estate that exist in that moment on the market at a national and international level, from the point of view of participatory financing.
2.Track the market in search of the best investments
Brickfy shows a large variety of projects that are in need of financing and are launched in the market through this investment alternative. You will have access to different real estate projects that are being carried out in the main cities of the world.
3.Real estate investments suitable for all budgets
Investment in brick is no longer exclusively reserved for those with large fortunes or for those who are professional investors. Now any person, from their couch at home, can invest in one or more real estate assets for a minimum of 5€.
4.Realize your real estate investments without language or currency barriers
Real estate Crowdfunding is a type of real estate investment that is very widespread throughout other countries, such as the U.K., the U.S., or France. However, if we start searching on our own for possible investment projects in these territories through that country’s Crowdfunding platforms, we are likely to encounter language and currency barriers when investing.
With Brickfy this barrier disappears, since from a single portal you will have access to all the available offers in your shop window to be able to compare, at a glance, all the investments in real time throughout different places.
You will only have to set up a personalized account, and you will be able to access the platform.
5.Geographic display of locations where real estate investments can be made
We also have a powerful search engine with which you can view, filter, and select the best offers based on your preferences: What is your risk profile? What amount do you want to invest? What type of real estate do you want to invest your money in? In what city? How long would you like to remain in the investment? What profitability range are you searching for? Etc.
Fulfill your dream of investing in "brick" with us in three simple steps:
Have you ever had an opportunity like this so close?