Real estate crowdfunding

This is a type of crowdinvesting that opens the world of real estate to everyone. As with other equity crowdfunding projects, real estate crowdfunding allows people to acquire stakes that will bear fruit, but generally in a shorter time frame.

A real estate crowdfunding campaign is in most cases intended to finance thepurchase of a property, itsrenovation or construction from scratch, with the ultimate goal of marketing the new property and making a profit.

WHY INVEST IN REAL ESTATE CROWDFUNDING?

A real estate project, especially for the Mamacrowd investor, allows to diversify the investment portfolio, targeting one of the most resilient and relevant sectors of the Italian economy, while also offering an excellent return-to-risk ratio.

There are two main business models within the real estate market:

1. I buy, build/renovate and sell (Buy to Sell)
2. Buy, Rent and Sell (Buy, Hold and Sell)

The former has a short-term time horizon (12/36 months), the latter a medium-term one (60/120 months).

Real estate is complex and requires various skills (economic/financial, legal, urban planning, industrial/engineering); therefore, the success of a real estate project is determined, to a good extent, by the professionalism and experience of the developer.

BENEFITS

Here is one of the first advantages of investing in a real estate crowdfunding campaign: all the necessary documentation is prepared by a team of professionals and can be found online, on Mamacrowd.

Other advantages are:

• participation in large transactions, even with a minimal investment
• concrete and tangible underlying asset
• prospective annual return on investment averaging at 10 percent
• returns over a short time frame
• investing together with partners with proven experience and track record
• diversification of one's investment portfolio

EARNING WITH REAL ESTATE EQUITY CROWDFUNDING

The gain for the investor is the profit that comes from selling in the case of the buy to sell model or from rents net of management costs plus selling in the case of buy, hold and sell.

Returns are related to the riskiness of the project; higher risk taken corresponds to higher returns.

RISKS

The main risks of real estate are:

• market (supply absorption)
• administrative (difficulty in obtaining licenses)
• construction-related (site contingencies)

These risks can be mitigated through professional real estate project management, which is why it is important to rely on experienced players. For more in-depth information, visit the risk page.

THE CHARACTERISTICS OF INVESTMENT

Real estate investment has distinctive characteristics:

• The 'time horizon is short, ranging from 12 to 36 months for buy-to-sell projects, a model whereby the project's profit is realized through the sale of the real estate units
• It is an illiquid investment, to return the invested capital it is necessary to wait for the sale of the real estate units and thus the conclusion of the project
• The percentage return averages from 10% to 15% per year
• It is usually a professional, stress-free investment: it is possible to invest easily, immediately and intuitively, without having to do anything and without any management commitment, in projects with a real underlying generally reserved for professional investors