Myths of real estate crowdfunding investment
The majority of myths surrounding real estate crowdfunding investment relate to the reputation of property as an investment. Indeed, like any investment, crowdfunding also carries risks. However, given the nature of the asset it is based on—newly constructed housing—it represents an investment with a good combination of profitability and risk.
In this article, we examine four myths about real estate crowdfunding investment that, like all myths, are false and deter potential investors. Our aim is not so much to recommend real estate crowdfunding investment but rather to unravel misconceptions that hinder a well-founded investment decision.
Myth 1: “Only experts can invest in real estate crowdfunding”
This myth is based on the mistaken idea that investing through real estate crowdfunding is exclusive to finance experts or sophisticated investors. In reality, crowdfunding platforms are designed to be accessible to anyone interested in real estate investment—an asset that everyone knows. The platforms typically offer clear and detailed information about each opportunity, allowing every investor—even if they are a novice—to make informed decisions.
Myth 2: “Real estate crowdfunding is a very risky investment”
While every investment carries a certain level of risk, real estate crowdfunding is not inherently riskier than other forms of investment. First, because the real estate sector is quite stable, considered a good store of value, and tends to appreciate in the long term at a rate higher than inflation. Additionally, real estate crowdfunding platforms usually offer diversification, enabling investors to distribute their capital across multiple projects that differ in segment, location, structure, etc. Moreover, as we mentioned, the transparency and information provided by the platforms help to better assess and manage risks.
Myth 3: “Real estate crowdfunding investment is complicated and time-consuming”
Contrary to this perception, investing through real estate crowdfunding can be surprisingly simple and quick. Platforms are designed to be intuitive and user-friendly, allowing investors to examine and participate in projects with just a few clicks. (This does not mean rushing our investment decision or succumbing to overconfidence or trends.) Furthermore, many platforms handle the operational management of projects, relieving investors from the burden of managing aspects such as administration and maintenance.
Myth 4: “The return on investment in real estate crowdfunding is low”
There is a misconception that potential gains in real estate crowdfunding are marginal compared to other forms of investment. However, several successful projects have demonstrated attractive returns for investors. While not without risks, real estate crowdfunding can offer competitive returns, especially when solid projects are chosen, and the portfolio is adequately diversified. In the case of Urbanitae, after completing more than 30 projects, the average annual return is currently 16%.
Debunking misconceptions surrounding real estate crowdfunding is essential to understanding its potential and the benefits it offers to investors. By providing accessibility, transparency, and diversification opportunities, these platforms are changing the way real estate is invested in. This is demonstrated by the reality of the sector in Europe, which has multiplied eightfold in the last five years. And in Spain, the growth led by Urbanitae, with more than 60% of the market share.
In summary, real estate crowdfunding represents an exciting opportunity for investors at all levels, challenging myths that might have been obstacles in the past. With due diligence and understanding of risks, this form of investment can open doors to a world of financial opportunities—and attractive returns—that were previously inaccessible to the vast majority.”