Investing in real estate crowdfunding is great but there are things to know before starting.
In this article, I list the top and worst European real estate crowdfunding platforms.
The best part?
Beyond the list, I will give you a step-by-step guide to avoid the typical investor mistakes and a checklist of what to do to invest in real estate crowdfunding more safely.
Let’s do it…
Table of Contents
List of the best real estate crowdfunding in Europe (updated):
- EstateGuru 11,46% (best pick, property-backed loans, read my Estateguru review)
- EvoEstate 11,44% (max diversification, equity and lending crowdfunding)
- Reinvest24 14,8% (well managed, growing, read my Reinvest24 review)
- Rendity 7% (no-Baltic platform, impressive growth)
- CrowdEstate 11% (old, reliable platform)
- SoMo 12% (U.K. good real estate crowdfunding in GBP)
- Housers 7% (worst pick, now getting better, read my Housers review)
So, now that I have my list I can pick one or two to start with. An this leads me to the next chapter…
⭐️ What is the best European real estate platform today?
I have invested in several real estate websites in the last 6 years, so I am building a lot of experience. I am also in connection with many excellent European real estate investors.
Many platforms have good performance but some may lack properties to invest and this may cause frustration in leggier investors. Some others may lack protections like a first rank mortgage to guarantee the loans.
When I search on the internet what is the best real estate crowdfunding I get the answer of very authoritative and popular website like “investopedia”, “The Fool”, NerdWallet” and more US based blogs. I need to know that the US based platforms they mention are NOT accessible from Europe in most cases.
So, If I am a European based investor I would only focus on the European websites.
Huge United States based platforms like Fundrise, CrowdStreet, Realty Mogul, Cadre and Fairway America are not accessible from Europe.
If I want to invest in real estate crowdfunding from Asia or from Middle East, I could find ways to use European crowdfunding websites. Also US investors could invest in European real estate crowdfunding by using online bank accounts nowadays.
Here is a comparison of real estate crowdfunding and P2P lending websites valid also for NON European investors.
EstateGuru is definitely my best pick so far, here is why…
Why EstateGuru is the TOP real estate crowdfunding in Europe?
- 100% mortgage secured loans
- The minimum investment is only 50 euros
- Low default rate
- Excellent auto-invest feature
- Great track record
- One of the biggest RE platform in Europe
In my opinion Estateguru is the safest real estate crowdlending in Europe.
Is real estate crowdfunding safe?
There are no investments with zero risk involved and real estate is no exception.
We should also distinguish real estate crowdlending from crowdfunding or equity crowdfunding.
Real estate crowdlending can be considered safer than other similar forms of investing like equity crowdfunding and also peer-to-peer lending.
The reason is that in many cases when I invest in a loan, that loan is secured by a mortgage. Doing so, in the worst-case scenario, I can still have the property sold and recover a fair share of my lent money.
That said, this kind of investment is still quite new and risky, so it cannot take a huge share of my global portfolio.
One more risk that real estate crowdfunding and crowdlending have in common is that the investment platforms can disappear and it may be long and complex to recover my investment in that case.
Low liquidity is another issue in most cases. This means that it is not always possible, easy or immediate to sell our stake in a real estate deal.
The last issue is that investing this way we normally have access to a limited number of data about the properties. Retail real estate crowdfunding investors should trust the platforms managers and their ability to get and superintend the deals.
What is real estate crowdfunding?
Real estate crowdfunding consists of the collective financing of real estate investments. In this way, private investors can invest in different real estate projects even with a small amount of capital (the minimum investment is usually €100 or less. This is not much compared to tens of thousands of euros I need in a traditional real estate investment.
Video real estate crowdfunding on YouTube
Here is the shortest and best explanation of real estate crowdfunding I’ve found on YouTube:
In the above video it is possible to understand what happens to my money when I invest in real estate through crowdfunding platforms.
❌ How to avoid the most common investors mistakes?
Paying attention to some details it is possible to avoid the typical beginner’s mistakes when choosing the safest and most convenient real estate crowdfunding websites to invest with.
1. I pick the best real estate crowdfunding for me
The first step is to select the right investment platform through which I am going to be able to invest in real estate crowdfunding.
Some new investing platforms may look amazing and might promise stellar returns. Be careful. Higher returns can lead to more risky investments. There is no point in investing in a project that looks spectacular if it turns out that the website is a scam and the only thing it is trying to do is to attract investors money to steal it.
That is why it is crucial to invest only through reliable, proven, old, stable, solvent and professionally managed platforms.
Has the platform been online for less than two years? Ok, I will not invest.
The same applies to real estate Crowdfunding that does not publish any past performance statistics on the website.
One more thing to watch out for is that there must be a real address in the footer together with contact forms and LinkedIn profiles of the management. When I am in doubt I write an email or I make a phone call. If I smell something fishy I can move to other platforms.
2. What kind of loans/deals do I want to invest in?
As I mentioned before, there are different types of projects and different kinds of structures within real estate crowdfuding.
In short, we can distinguish three main categories:
- Loans to real estate developers
- Buy-to-let long-term deals
- Renovation and resale to get capital gain
Moreover, most platforms will focus on crowdlending, crowd equity or Crowdfunding.
In this article, I am not going to go into detail on each of these categories as that would need too long to cover thoroughly.
When I choose one investment or another I focus on the outcome I want first.
If what I want is to receive automatic income every month, as if I was letting my property, then I would invest in projects that consist of buying and renting homes or lending to developers. Doing so I will receive every months a part of the rent I invested in or the interests that my loans is generating.
If I am not in hurry and I want to accumulate wealth in the long term, then I could focus on buy-to-let projects with a capital appreciation or renovations.
In general, it is safer to combine the different types of projects to have a well-diversified portfolio in more countries, but this will depend on each investor’s strategy.
3. What is the minimum return worth my attention?
Let’s be honest, real estate crowdfunding and crowdlending can be risky as any other real estate business.
This is why I should make sure the return is reasonable compared to the risk.
In my opinion, returns below 5% may not be worth to investing.
Once I’ve decided what platforms to use and what types of deals I will focus on, I am ready to go through the deals and establish my investment criteria. As we said, one of the first criteria is the return. This doesn’t meant to go for the highest return whatever it takes.
Now I will notice that the return that may be acceptable for you may be too low for me, or vice versa.
In my case, I only consider projects that offer a minimum return of 8% per annum, because if the return is lower, I prefer to invest in other types of assets that are more liquid or that carry less risk.
I should consider what minimum return I am willing to accept when investing in real estate crowdfunding just the way I do with other investment asset classes.
4. Long or short time horizon?
Some investors say that short-term investments are safer.
I don’t agree.
Many short-term investment bring a different risk, not a lower risk. In addition to this, every time I finish a short-term investment I am left with the problem of finding a new one for my money.
Investing is a process, not a one-shot action.
So, what is the right time horizon for real estate crowdfunding/crowdlending deals?
In the case of crowdlending (my best option), the time horizon is clearly defined. For example, some loans may have an investment horizon of 6 months and some others can be 24 months. Normally we won’t find many deal below 4 months or beyond 36 months. The average loan duration is 9/18 months.
In the case of real estate crowdfunding, the term will depend a lot on the type of project in question. I should bear in mind that real estate investments are usually medium-term investments, so it is common to see projects of between 24 and 36 months (although there are of course projects as short as 12 months as well).
It is important to notice that, with a few exceptions (such as EstateGuru or Housers), real estate crowdfunding platforms do not always offer an early exit option, they call it the “secondary market”. This can make a huge difference to investors. Therefore, I would not invest in projects that exceed the term in which I will need the money invested. For example, if I know that I will need the money in 12 months, then I will not pick loans or deals that will last more than one year.
If I feel uncomfortable having my money stuck in medium-term investments like these I may be interested in peer-to-peer lending instead. P2P loans allow me ti invest in deals that can be as short as one month. My best platforms now are Mintos, IUVO and Peerberry.
There is also a complete list of the best P2P lending website in Europe here.
🔎 More things to understand before investing
My real estate crowdfunding review.
Here is a shortlist of questions I always make sure to ask myself before investing to make it safer.
1. Guarantees offered
I don’t trust too much the guarantees as I believe that they may disappear without previous notice just anytime.
To perform a due diligence before investing is safer.
I can read of fantastic guarantees but I need to make sure who is offering those safeguards to know if that is valid or just a promise or a wish.
In general, I prefer real estate crowdlending over crowd equity and Crowdfunding because the guarantees are easier to assess.
One example: If I finance a developer loan in Finland for 12 months I can easily check how long the borrower has been on the market, what is his history and if he failed to honour previous loans in the past.
One of the best safety nets for the type of investment is to have access to a secondary market. Many times I have been able to sell my late loans just applying a tiny discount. As soon as I sell a late loan I immediately buy a new one that will start to pay me interest immediately.
2. Management skills and past
Platform management is in charge of handling all the paperwork, obtaining the necessary permits, finding tenants/buyers, etc. Therefore, I have to make sure the manager’s experience and most of the previous projects she has carried out have been completed successfully.
I always make sure the website I want to use to invest is managed by real estate professionals, not marketers.
3. Geographical diversification
Have more loans and deals in different countries/cities is always safer.
Most investor focus on deals in their countries but this is a mistake (proximity bias).
A good indication of a good deal can be:
- The property is in the center of a town
- It is in a politically stable country
- There is no intention of changing investment laws in that country at present
Never forget that if the property is centrally located and if it is in an area subject to future appreciation the deal is safer.
The worst real estate deal I can encounter?
- It is a long term loan
- to a new developer
- for a property that is far from large towns
- with a high LTV
- with a third rank mortgage
- the guarantee is just land or developers shares
- in a financially unstable country
4. Data available
I need data to make informed decisions.
The best real estate investing platforms normally provide all the numbers I need to decide what loans and deals are suitable for me.
Here is some information I take into account before investing:
- in case of loans an LTV (below 70% is better)
- State of the building or deal (in progress/still have to start/rented/etc)
REITs Vs. Crowdfunding
REITs can be a nice alternative / integration to real estate crowdfunding.
Of course I need to bear in mind that markets fluctuate, so it is normal to see my capital to gain and lose value day by day.
Real estate crowdfunding for beginners
EvoEstate and Rendity may be both good options for beginners and still inexpert real estate investors.
EstateGuru is also easy to use.
Popular real estate crowdfunding in Germany
The most famous German real estate crowdfunding are Rendity, Exporo, Zinsland and Engel & Völkers Capital Crowdinvesting.
Real estate crowdfunding uk
The biggest real estate crowdfunding websites in the UK are “the house crowd”, “property partner”, “Hub housing” and “Crowdcube”.
This market is very mature and moves a huge share of the total market.
Here is a short list of the top real estate crowdfunding in Europe in 2021:
- EstateGuru 11,46%
- EvoEstate 11,44%
- Reinvest24 14,8%
- Rendity 7%
- CrowdEstate 11%
- SoMo 12%
✂️ Conclusions
Real estate can be an excellent new way of investing in properties for retail private investors.
The best part is that it is possible to spread our investment over a huge number of deals of different kind in different countries.
I am a DIY investor myself and I am getting spectacular returns from my best real estate platforms in Europe.
Now it’s your turn!
Write in the comments what is your experience with real estate Crowdfunding so far or what prevents you from starting right now.
Real estate crowdfunding FAQ 🍑 🍆
I like EstateGuru, but it is not the only good one.
One of the benefits of this type of investment is that private investors with little money can invest. Minimum investment is about 100€ in Europe.
It is a good integration to the stock market and to the traditional real estate investing.
It is difficult to say. In general I feel quite safe investing in property backed loans. Equity crowdfunding can be more challenging.
