Peer to Peer and crowdfunding real estate platforms are an excellent way to get into the property investment game, and as you get more involved, you are likely to come across private investment opportunities.

By private I mean off-market opportunities that are typically reserved to a much smaller pool of investors and are found through connections in the real estate world. By writing about real estate crowdfunding and talking about it to my friends and connections at conferences, I eventually got in touch with some big players who deal in specific types of property investments.

While the crowdfunding platforms tend to offer a wide variety of properties, such as student housing, new developments, buy-to-sell, buy-to-rent etc, typically the private investment scene tends to be more specific in type and geographical region.

The reason is simple. You will typically find a person or small team who have been working in the industry for many years and have become experts in the market of a particular city or region as well as a specific type of property.

To take Barcelona as an example, I know real estate experts who specialize in obtaining some of the most dangerous and untouchable properties in the city (occupied by squatters, drug dealers, etc), clearing them out and totally refurbishing them to go on and sell for a tidy profit.

Others focus on foreign buyers who tend to be looking for higher-end finishing and specific locations and types of apartments when compared to the local buyers. Since most local developers focus on the local buyers’ needs, there is a niche that opens up that presents nice profits if you manage to meet the high needs of the foreign buyers as well as be able to market to them.

These are real niches with lower competition due to the extra skills needed to succeed. In the first case, you need to be able to know how to deal with very difficult and possibly dangerous people and probably employ people who will do some brute forcing to clear the spaces, and you need to be good at marketing to convince buyers that these black spots are now a great buy.

In the second case, you need to have knowledge of the traits of foreign buyers and speak their language. This will make it much easier to design an apartment for that specific buyer profile as well as know where to market it and then be able to seamlessly tour the apartment with potential buyers and deal with any concerns they might have.

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I typically receive 2-3 investment proposals per week, mostly from online investment platforms. Very few end up convincing me enough that I actually invest my money in them.

A friend recently came across an interesting opportunity that he sent over to me to get my opinion. Here’s the quick analysis I made; I think it’s a good case study to get an insight into some of the things I look at when evaluating opportunities.

The opportunity in question is a very novel one. It consists in buying avocado trees in South Africa on a usufruct basis. So you don’t own the land but you own the trees and reap profits on the sales of fruit and the appreciating value of the trees themselves.

It might very well be a good investment, but I typically need to see more information before investing in something, especially since it’s something that I’ve never come across before.

I start by taking a look at the homepage and notice an immediate red flag:

The site says that this is a “Safe and secure investment opportunity that will generate a 3 year cumulative capital growth and return of more than 113%”.

Whenever a platform guarantees or implies a guarantee of profits like that it’s wise to stay away. What if the crops are destroyed by some bad seasonal weather or infestation? And how do I trust this guy with my money?

So far this sounds like anything but a “safe and secure” investment. Investments returns are almost always shown on a yearly basis, so putting a 3 year period to arrive at the 113% is misleading. It also makes little sense; am I getting a 113% capital growth or return from sales of avocados? If not downright scammy it hints at a level of unprofessionalism.

Doing a Google search returns very scant extra information. There’s a YouTube video which shows the orchards and the owner of the operation, but it’s something they produced themselves. I can see that they were crowdfunded through Seedtribe, although there are no specific details available there either.

Just to explore how the site works, I tried buying a few rows of orchards costing around $10,000. It sent me to the checkout page, asking for some basic information before I hit the button to purchase, as it if were some $10 electronic item you’d purchase online.

Moreover, the checkout page itself is not even secure. Nowadays most sites are completely secured using SSL, but this site doesn’t even have the checkout page secured. This prompted me to check out the code of the site, which looks pretty basic and amateurish, and definitely didn’t cost much to build, given the shortcuts taken and lack of professionalism in the code.

My conclusion is therefore that the opportunity is quite risky due to the scant information available, and I would definitely not invest in it myself.

If I were absolutely in love with the idea and lived anywhere close to the orchard, I would perhaps actually get to know the owner and then think about doing some investment after having gathered the extra information needed.

However, as an online investment, it simply doesn’t make sense in my opinion.

It wasn’t too long ago when equity crowdfunding (EC) was seen as a funding vehicle that had nothing going for it save for its novelty. Many supposed that it would eventually fizzle out once the hype around it died, and startups would come running back to VCs for funding. Back then, people were fearful about a lot of things like the lack of venture capitalist-support in CF campaigns, since they interfered with the VCs and their direct investments on startups.

It’s a different story today, however, and equity crowdfunding is considered to be just as mainstream as venture capitalist investments. But while the panic that accompanied it is long gone, some of the fears surrounding equity crowdfunding remain, due in part to prominent myths that fuel them today.

Here are 5 of them that possibly even you believe.

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In many ways, the American passage of the JOBS Act in 2012 revolutionised the investment industry worldwide, and we feel its far-reaching effects even in Europe early in 2019 still. It’s what ultimately led to the creation of the first crowdfunding platforms, after all, which would herald the age of crowdfunded projects, properties, and equities, to name a few.

With the coming of this age came risks that were never before seen in the investment market, however. While bad diversification has always been a possibility on any investment portfolio, it had never happened at such high rates and to so many people before equity crowdfunding came along, for one. The reason, says Luke Taylor of Wharton, is “inexperienced investors [who] don’t have the skills to decipher between a good company and a bad company.”

This hardly comes as a surprise since part and parcel of the movement that gave rise to equity crowdfunding is lowering the bar of entry for investors and companies alike, which means inexperience on both sides of the equation. Bad diversification is a two-way street, after all: equity crowdfunding attracts startups and growth-size companies which have a higher chance of failing or defaulting, as well as new investors with not-so-deep pockets and unrealistically high expectations. This is not to say that these are overrepresented in equity crowdfunding in general, but the combination of the two does make up the majority of failed campaigns and badly diversified portfolios.

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Real Estate always was and will be a valuable asset, that is why property investments are considered by shrewd investors to be the most secure way of investing. Real Estate investments have high requirements for legal paperwork and steep entrance fees, but property crowd investing platforms like Reinvest24 are changing this.

Rental properties but investors will also benefit from capital appreciation.

This platform specializes in Baltic real estate, and therefore we need to focus on the economic outlook of this region before we talk about investing there. The hottest cities in the Baltics at the moment Tallinn (Estonia), Riga (Latvia) and Vilnius (Lithuania). Reinvest24 has a special focus on Tallinn at the moment, so let’s talk about some of the reasons why this is so.

The average salary in Tallinn has almost tripled in the past twelve years and that’s a great indicator for the purchasing power of the local population and consequently the demand for quality real estate. A lot of people are moving to Talinn from the countryside and other countries because of the growing market in the city.

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