- Real estate crowdfunding has experienced insolent growth in recent years.
- It involves lending money to a promoter or property dealer to help them consolidate a program.
- The average yield (9%) is very attractive.
They are called Club Funding, Homunity, Anaxago, Wiseed, Fundimmo or Koregraf… Little known to the general public, these Internet platforms have nevertheless shown spectacular growth in recent years. Like a dozen other start-ups, they are benefiting from the recent craze for real estate crowdfunding. This method of crowdfunding consists of lending money to a promoter or a property dealer in order to help consolidate a housing or office program. In exchange, the investor receives remuneration in the form of interest and, once the operation is built, recovers the stake and the profits.
And it pleases: the total sums collected almost double every year in France. Despite the economic and health crisis, more than 500 million euros were invested last year (+ 35% compared to 2019). “Most collections are completed in a few minutes. Sometimes the Internet user barely has time to connect that it is already over ”, confirms Laurent Altmayer, founder of Hellocrowdfunding, an aggregator of real estate crowdfunding projects.
Easy to access and very profitable
If the concept attracts individuals so much, it is primarily because it is easy to access. No need to have a big wallet to get started. “The entrance ticket is very low. Often around 1,000 euros. Some experienced investors will rise well beyond 10,000 euros, but the average ticket was 4,711 euros in 2020, ”reports Jérémie Benmoussa, president of the Fundimmo site. The placement period is not very long either, “between 6 and 36 months depending on the project”, the time for the developer to complete the marketing and construct the building. Another advantage: the investor knows where his money is going. “He chooses from a list the program he likes, the place, the operator. The investment will not go elsewhere. It’s precise and transparent, ”says Jérémie Benmoussa.
But what mainly makes the success of real estate crowdfunding is its return: 9.3% per year on average. A rate much higher than savings or life insurance products well known to the French. “This rate may be surprising as it is so attractive. But it is contractually fixed between the investors and the operator. His interest is to raise funds fairly quickly, ”explains the manager of Fundimmo.
Risks that should not be overlooked
Would real estate crowdfunding then be a miracle investment? “No, like any financial investment, there are risks to be taken into account,” warns Laurent Altmayer. The risk of delayed repayment, for example, if the real estate project is hampered by a hazard (technical, climatic, legal, etc.). Last year, 5.7% of projects suffered from a delay of more than 6 months. “If the investor is patient, this is not necessarily a problem because his interests continue to run,” notes Jérémie Bensoussa. There is also the risk of default, partial or total. Clearly, the promoter can no longer cope and is unable to reimburse the investor, who has only his eyes to cry. A situation that only concerned 0.16% of projects in 2020.
“For the moment, these flaws are marginal. But we will not really measure the effects of the economic crisis for a year or two. Obviously, more and more operators will encounter marketing or financing problems. We must therefore remain vigilant, ”warns Laurent Altmayer.
“The market will continue to grow”
To reassure potential investors, Internet platforms ensure that only the most reliable projects are selected. “After analysis of the files, we keep only one in three”, indicates the president of Fundimmo. “Some sites even claim to select only one out of 10. But we don’t know if that’s true. It is not because the platform makes a selection that it is necessary to grant blind confidence to the project ”, relativizes Laurent Altmayer. He advises to diversify his investments, “basically do not put all your eggs in one basket”. He also recommends being “attentive to the information presented” without “focusing on performance”.
Despite these uncertainties, real estate crowdfunding seems to have a bright future ahead. “The potential for progress remains extremely important,” considers Jérémie Benmoussa. The concept will gain notoriety and the market will continue to grow. For 2021, we expect a total of collections of between 700 and 900 million euros. “” The crisis will be a real test for the players, is convinced the founder of Hellocrowdfunding. It is this which will validate or not the strength of the market. “