Risks and values of the estate crowdfunding
Can real estate investments be done without a six zero euro cash? Until some years ago the answer would have certainly been no. Nowadays things are changing, even though speaking about a six zero euro investments would be anyway wrong.
Real estate crowdfunding allows the searching of investors all over the world and for all kind of projects. Nonetheless, it involves a certain amount of risks if skilled professionals do not deal with it properly.
What is the real estate crowdfunding
In the crowdfunding, the online preview of a project is issued and “rewards” to those who finance it are guaranteed. In this way, even in case big capitals are not available the planning of the project can be however carried out. The system has already proved to be efficient in cartoons, books, translations and even movies.
Can it thus be applied to the real estate scenario? The answer is yes: real estate crowdfunding is a reality, even though it is less elementary than it could appear to be.
During the years different platforms, which are meant to launch this kind of fund raisings, were born. Some of them are considered to be generalist and deal with an overall view of the crowdfunding. On the other way, some others are specialized in the real estate crowdfunding in Italy and the world over. The first Italian platform to offer these services was Walliance and there followed many others.
A way to invest in real estates with a few amount of money?
Launching a crowdfunding project does not mean being able to start the business cashless, even when the business is running at its best.
At best one must, nonetheless, invest in order to have the project advertised and draw in investors. This means that a clear and winsome business plan must be drawn, a brand must be developed, and investments even in paid advertising must be carried out.
In the worst case scenario, however, the crowdfunding campaign cannot provide all necessary money. Consequently, finding further funds would be highly suggested if a project is to be carried out.
All above mentioned, the real estate crowdfunding remains only a way of carrying out projects otherwise considered inaccessible for you and your company. It is not simply costless as one might consider it.
Equity crowdfunding VS lending crowdfunding
For a crowdfunding campaign to be successful possible investors must be provided with a real benefit. In the case of the real estate crowdfunding there are two possible solutions:
- equity crowdfunding;
- lending crowdfunding.
In the equity crowdfunding, the project financier acquires part of the company involved in the project. As a matter of fact, if the project runs well he will permanently acquire a part of the revenue. On the contrary, in the lending crowdfunding financiers lends money. Once the project ends all the money will be due, included the agreed interests.
Both solutions have pros and cons for both the crowdfunding launchers and the investors and a certain dose of lurking business risk is likely to appear. Launching in a crowdfunding campaign without consulting the professionals is, for this reason, not the wisest thing to do.
The wisest thing is always to address to real estate skilled consultants. They will care and give advice on how to decline a project in order to have a much safer result.
