Real estate crowdfunding is one of the easiest ways to invest in property and one of my favorite forms of investment together with P2P lending. Until recent years, the only options to enter the real estate market were to either buy property directly or to invest in a REIT. Now, we have real estate crowdfunding sites, which are somewhat between those two forms of investment. If you want to learn more about the differences between these types of investments in the property market, check out my article on REITs vs Crowdfunding VS Private Investing.
Before we talk about my favorite real estate crowdfunding sites in 2020, let me remind you that I’ve been investing in real estate through online platforms since 2015, and I’ve used many platforms targeting various geographical regions.
The Spanish investments have been my biggest disappointment, largely due to either the incompetence of the platform team or the horrible government legislative changes.
Investments in the UK have also not provided me with much joy, but apart from the Lendy scam, the other platforms have been quite well managed and the big issue with property in the UK has been the Brexit event which was quite unexpected and threw everything off the rails.
On the other hand, the Baltics have provided some excellent returns, and this is what I consider to be the hottest real estate market in Europe at the moment. The German and Austrian markets have also provided me with stable returns – these are mature markets and the platforms in these countries tend to be run by serious and ethical people.
Investing in real estate online can be a daunting prospect to many new investors, as they might not be used to mixing an offline asset like property, with the technology and intangibility of the internet. And that is why I’d like to guide you towards what I feel are the best and most trustworthy platforms of 2020.
Keep in mind that within each platform there are different modalities of real estate investments. I’ve written briefly about these in my article about risk vs yield in real estate investment.
The vast majority of deals are situated in Austria. There are also a number of opportunities in Germany, too.
In terms of statistics to date, Rendity notes that it has successfully completed 63 funded projects, which translates into €34 million in invested capital. The average annualized return thus far amounts to 6.10%.
This is a very solid platform with a good team behind it, and investors have been very happy with the results so far.
You can read my full review of Rendity to learn more about this platform and decide whether it’s the right choice for you.
After having invested in this platform early in 2019 and speaking with Tanel Orro (CEO of Reinvest24) on my podcast I can safely say that it’s one of my favorite real estate platforms. I like their approach of being cautious and very transparent with their investors. They will soon have a secondary market available as well. Their focus is 100% Estonia at the moment but they have plans to expand in the future.
Whereas other platforms publish risky loans indiscriminately at times, Reinvest24 are focused on projects that return interst over their lifetime. Their idea is to obtain real esate at very good prices, do some great refurbishing and then rent it out for some sweet monthly returns.
I would especially recommend such a platform to someone who wants to build a monthly passive income stream that can fully or partially sustain one’s lifestyle, which is what has popularly come to be known as financial independence, and closely linked to the FIRE (Financial Independence, Retire Early) movement.
EstateGuru provides investors with the chance to invest in real-estate loans. The projects usually yield a bit more than 10% and are on average a year long.
Apart from pure real estate development loans for new projects, they also put up the following types of loans on the platform:
- business loans
- bridge loans
- reconstruction loans
Most loans return interest on a montly basis, although some have other arrangements. The main market for EstateGuru is Estonia, however I have also seen loans from Latvia, Lithuania, Finland, Spain and Portugal. I expect them to keep diversifying geographically as they grow over the next few years.
EvoEstate is an innovative platform as it aggregates and curates the best deals from many platforms. The team at EvoEstate specialises in real estate deals as they believe that this is the investment vehicle that will produce the best and most reliable returns in the next few years.
You can read my full review of EvoEstate or listen to my podcast with EvoEstate cofounder Gustas Germanavičius for more information.
This is the top UK real estate platform in my opinion. They’re very well organized and professional in their analysis of each investment opportunity, which enables me to make informed decisions about my investments.
I’ve written an in-depth Property Partner review where I explain how this platform works. I’ve been very happy with how I’ve been treated as an investor. I think of this platform as one of the bedrocks in my real estate investment strategy.
I’ve been investing in UK real estate for several years through this platform, and even though Brexit was a tough blow, I have high hopes for future returns as the UK will never lose its appeal for international investors and expats.
Germany is one of the top countries to look out for when investing in real estate, and thankfully the iFunded platform makes it easy for investors to get a piece of the German property market.
I recommend reading my detailed iFunded review to see why I decided to invest in German real estate with this platform and what results I obtained.
They still have to fully develop the English version of their content (especially their newsletters which are currently only sent out in German), but it’s nothing that Google Translate can’t solve for you.
Crowdestate was launched in Estonia in 2014 and has a very good track record with returns upwards of 20% and more than 40,000 investors to date. I love their site as things are very easy to find and it’s a pleasure to navigate through all the investment opportunities.
There is also a secondary market which helps maintain liquidity with your investments. I have written about my experience on Crowdestate in my full review so check that out if you want to see how I was able to obtain 13.28% returns on this platform so far.
The Bulkestate platform, as the name implies, enables real estate investment project crowdfunding and apartment bulk-deals for a price lower than the market value.
Bulkestate concentrates on Latvian real estate, and you can learn all about why they made this choice in my interview with the founder and CEO of this platform, Igor Puntuss, on Mastermind.fm.
You can also read my Bulkestate review for more information about this platform. Average returns are over 14% per year which is very good. You can invest in property development loans or engage in group buying of apartments, which is perhaps a unique feature of this platform and one to keep an eye out for in the coming months.
Raizers is the platform of choice if you want to invest in French real estate. It’s a platform that has been operating for 5 years with zero defaults. Go ahead and read my Raizers review if you’re looking for investing options in France specifically.
Platforms to Avoid
Unfortunately, there are platforms that are best avoided, mostly due to the following two reasons:
- Basic incompetence and inexperience at investing and managing real estate investments
- Extreme focusing on marketing and raising money at the detriment of solid investments
You will find platforms that have either one or both problems and ultimately have zero respect towards their investors, and thus are best avoided.
Some have already gone out of business, such as UK platform Lendy, while others manage to hobble along driven by deceptive marketing strategies.
I used to really like Housers because they enable me to invest in various countries through one platform.
Since joining Housers, I’ve invested in properties across Spain, Portugal and Italy. There are many different types of properties and investments available on Housers, and they even had an opportunity where I was able to invest in a piece of art.
However over the past years the platform has really gone downhill, focusing almost all their efforts on deceptive marketing campaigns and ignoring emails and phone calls of many investors including myself.
Also keep in mind that the profits on the investments on Housers will be taxed at source. This is something I don’t like about this platform as it takes a chunk out of your profits. The profits from Portuguese profits are taxed at 28%, while the ones from the Italian properties are taxed at 26% and the ones from Spain are taxed at 19%.
Due to this reason, although I did invest in Portuguese and Italian properties in the past in order to learn more about the property market there, I will stick to the Spanish projects in the future and thus get a lower tax cut. There is also the possibility of soliciting a tax refund from these countries if your country of residence has a double taxation treaty with them which effectively lowers the withholding tax due. However, I find that too much of a hassle as it is not a straightforward process to get this refund.
I have also invested heavily in Property Moose, but due to the changing conditions in the UK (especially the South East) caused by Brexit, the company had to undergo some restructuring and is no longer accepting new investments.
All shares have since been transferred to UK Diversified Property, which has exciting plans to be the first such crowdfunding platform to be listed on the UK stock exchange.
At the moment they are going through a process of reorganizing the assets and obtaining revaluations of each of the many properties under management.
Things have been delayed over and over again with the stock market listing, but I still have hope that I will eventually get a good return on the money invested there when the listing finally happens.
Frequently Asked Questions
How are these investments taxed?
Check out my article about the taxation of P2P and real estate platforms in Spain. Although I wrote that article with Spanish residents in mind, the same concepts apply to most other countries in Europe.
Doesn’t the publication of a project’s financial data in a public manner negatively affect the eventual sale of the property?
Not really, although it might initially appear to have that effect. In reality, what happens is that the eventual buyer is looking at the property and comparing the price to other properties in the same area in the same conditions. He is also comparing the price and property to other properties he has shortlisted, even in other areas. Therefore, ultimately these two facts are much more important than the limited downside of the project details being published on the platform.
Many platforms also limit access to project’s most important financial details to investors themselves, meaning the eventual buyer (unless he is an investor himself) would not have seen those details.
Which are the best geographical areas to invest in?
As I mentioned earlier, I believe that the Baltics together with Germany and Austria offer the best opportunities at the moment.
However, the real estate market is in constant flux due to the numerous factors that affect it, and you therefore need to do your homework properly before deciding on an investment. For example, the duration of the investment can be the main differentiating factor between a successful investment and a disastrous one. Some markets offer time-limited but very lucrative investment windows, while other markets have certain properties that make them really stable and thus ideal for longer term investments, perhaps at lower rates of return.
Do you know of any other platforms that I should check out? Let me know in the comments section.