CROWDFUNDING FOR PROPERTY INVESTMENT
As the Spanish property market continues rising in coastal hotspots like Marbella and big cities such as Madrid and Barcelona, new opportunities for investment in bricks and mortar are starting to appear.
It has been noticeable on the Costa del Sol that high value properties in and around Marbella, particularly for villas and luxury apartments in areas like Sierra Blanca, the Golden Mile and Nueva Andalucía, are in increasing demand from investors and end users looking for a home in the sun.
Positive property trend
But there is one problem for promoters looking to develop projects that take advantage of the positive trend in the market – finance. Finding funding for a project can be a lengthy process, but now an innovative new company is looking to provide the money for housing and commercial property schemes by using that most modern of internet fundraising methods – crowdfunding.
The idea applied by Housers.es is simple: rather than trying to find a few investors to contribute large sums, why not find a hundred people willing to put up smaller amounts? For this they get to invest directly in a project of their choosing, with the prospect of returns that are much higher than those available from bank savings accounts.
Alternative form of financing
The scheme gives developers access to an alternative form of financing that is not reliant on banks and not subject to variable rates of interest. The amount of money people can invest is restricted due to legal issues, but generally for a private investor it is €3,000 per project up to a maximum €10,000 a year through the site.
The funds raised are used to buy and reform property that is below market value, then either rent it out or sell for a profit. Returns are paid out monthly for rental income, or in a lump sum on the sale of a property.
These are early days for the scheme, with only three projects and €23,000 invested according to the website, so we shall have to see whether crowdfunding really takes off when it comes to real estate, but the company certainly has ambitious plans. Housers.es is looking to raise €300million to buy 1,500 properties over the next three years.
Marbella property is a hotspot
For people looking to invest relatively small amounts in property it may be an interesting proposition, but of course it is not risk free. Fixed costs remain, for example taxes and fees for property purchase, plus the 12.5 per cent cut of profits Housers.net takes. For many people, more traditional forms of investment or simply buying a house or apartment in a hotspot like Marbella and thus cutting out the middle man, may still be seen as the better option. Should you prefer this option, contact us for authoritative information and personal service.