How to choose a real estate crowdfunding project: where to invest and where not to
Real estate crowdfunding has become an attractive alternative for those looking to diversify their portfolio and obtain competitive returns outside the traditional brick-and-mortar investments of small and medium investors. Today, real estate crowdfunding has democratised access to property projects, allowing anyone to invest in the sector with small amounts, starting from €500. However, not all platforms or projects are the same, and making informed decisions is essential to minimise risks and maximise returns.
The ‘track record’ of crowdfunding platforms and property developers
One of the first steps when evaluating a real estate crowdfunding investment is to analyse the history, or track record, of the platforms managing the projects and of the developers behind them. This analysis helps to assess past performance and determine how reliable they are. A solid track record is usually a sign of professionalism, experience, and commitment to investors.
When reviewing the track record, it is important to pay attention to factors such as:
- Successfully completed projects: assessing how many projects have been funded and whether deadlines and return forecasts were met. For example, at Urbanitae we have financed more than 220 projects since 2019, with an annualised average return close to 13% for investors.
- Types of projects financed: ensuring that the projects are varied and aligned with your investment goals. Some investors prefer residential development projects, while others seek commercial or mixed-use properties.
- Investor satisfaction: researching reviews and testimonials from other investors about their experience with the platform is key. Urbanitae has over 1,700 verified reviews on Trustpilot, with a “Very Good” rating.
The track record of the property developers leading the projects is equally crucial. An experienced developer with a reliable delivery history can make the difference between a successful and a problematic project.
Regulation and legal compliance: a fundamental guarantee
Legal security is one of the cornerstones of real estate crowdfunding. Before investing, it is crucial to confirm that the platform is regulated by a competent authority, such as the Comisión Nacional del Mercado de Valores (CNMV) in Spain. According to official records, there are currently 26 registered crowdfunding service providers in the country, all subject to strict legal requirements.
A regulated platform must comply with the European regulation approved in 2020, applicable in all EU member states. Key points include:
- Financial transparency: providing clear and complete information about the projects and the associated risks.
- Fund segregation: keeping investors’ funds separate from the platform’s operational resources.
In addition, projects must meet local legal requirements, such as urban planning permissions and environmental regulations. According to the report The Revolution of Resilience by consultancy PwC, implementing good compliance and business resilience practices allows organisations to significantly reduce operational risks such as litigation and delays, by proactively preparing for external disruptions and regulatory changes. PwC recommends prioritising investment in innovation, building flexible business models, and fostering resilient organisational cultures as keys to success.
Risk assessment: not all projects are equal
Risk assessment is one of the aspects that deserves the most attention when deciding to invest in real estate crowdfunding. Not all projects are the same, and the associated risks vary considerably. Before making an investment, it is essential to conduct a thorough analysis to understand potential risks and how to mitigate them.
Key factors to assess:
- Project location: metropolitan areas such as Madrid and Barcelona tend to be more stable. These cities benefit from high demand and limited residential supply, along with strong performance in logistics and office spaces. According to CBRE, Madrid and Barcelona rank among the ten most attractive European cities for investment in 2025. Madrid rises from third to second place, while Barcelona climbs from seventh to fourth in the European top 10.
- State of the real estate market: in the first quarter of 2025, the annual change rate of the House Price Index stood at 12.2%, according to INE. Meanwhile, the annual return on residential property in Spain in 2024 is 6.7%, 0.3 points higher than a year ago (6.4% in 2023) and 1.7 points higher than ten years ago (5% in 2014), according to The profitability of housing in Spain in 2024 published by property portal Fotocasa.
- Operational risks: delays in property development projects are one of the sector’s main challenges. According to a report by PlanRadar, 75% of construction executives in Spain attribute delays to labour shortages. At Urbanitae, timeframes typically range from 20 to 30 months, which is standard for completing and delivering a development. However, for debt projects – that is, loans to developers to carry out construction – timelines are usually shorter, typically ranging from six to 18 months.
Tools for project evaluation: profitability and due diligence
Before making an investment, it is essential to weigh up the risk–return equation. As fixed-income instruments like bank deposits and treasury bills have become less attractive due to falling interest rates, alternative options with low risk and high returns have emerged. In this context, real estate crowdfunding is an appealing alternative, especially for those looking to diversify their portfolio without taking on high risk.
Due diligence is another essential element, which includes:
- Financial analysis: covers return projections and cash flow modelling.
- Legal documentation: ensures the project is properly registered and free of legal issues.
At Urbanitae, all projects are subject to two approvals by the Investment Committee, which must unanimously greenlight them, and three due diligence processes: commercial, legal, and technical.
How to invest wisely
Real estate crowdfunding offers attractive opportunities, but deciding where to invest – and where not to – requires careful evaluation of multiple factors. From the platform and developer track record to regulation, financial solvency, and risk assessment, every detail matters.
Urbanitae is today’s leader in the Spanish real estate crowdfunding market thanks to our focus on transparency, regulatory compliance, and strict project evaluation criteria. Each project must obtain unanimous approval from our Investment Committee, which includes independent experts, and pass triple due diligence: legal, technical, and commercial.
While this commitment to quality reduces the number of projects we can publish on the platform, prioritising capital protection over profitability – through guarantees and conservative business assumptions – has enabled us to achieve positive returns on 100% of our projects, with an average IRR close to 13%.
