This is a type of crowdinvesting that opens up the world of real estate to the collective. As with other equity projects, real estate crowdfunding allows people to acquire stakes that will bear fruit, but in a shorter time frame.
A real estate crowdfunding campaign can aim to finance the purchase of a property, its renovation or construction from scratch, with the ultimate goal of marketing and making a profit.
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:
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 operator.
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 the relevant portal.
Other advantages are:
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 andsell.
Returns are related to the riskiness of the project; higher risk taken corresponds to higher returns.
The main risks of real estate are:
- market (supply absorption)
- administrative (difficulties in obtaining licenses)
- construction-related (construction contingencies).
These risks can be mitigated through professional real estate project management, which is why it is important to rely on players with proven experience, but don't worry because the Mamacrowd team takes care of the selection of projects to be brought to the platform.
Real estate investment has some peculiar characteristics:
- Being an investment that on a real asset (a property) is considered low risk of loss of invested capital;
- The 'time horizon is short, ranging from 12 to 36 months for buy-to-sell projects, a model whereby the profit of the project is realized from the sale of the real estate units;
- It is an illiquid investment; in order to return the invested capital, it is necessary to wait for the sale of the real estate units and thus the completion of the project; and
- Rates of return average from 7 percent to 12 percent per year
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