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How does real estate crowdfunding work?

What is real estate crowdfunding exactly and how does it work?

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What is Real Estate Crowdfunding?

Real estate crowdfunding is a relatively new way to invest in real estate properties. Unlike traditional real estate investing, which typically requires a large amount of capital and a high level of risk, crowdfunding allows investors to pool their money together to purchase properties, reducing the financial burden and risk for each individual investor.

The process of real estate crowdfunding is relatively simple. First, investors find a crowdfunding platform that specializes in real estate investments. These platforms typically feature various properties available for investment, along with information about the potential return on investment and the level of risk associated with each property.

Once an investor has found a property they are interested in, they can invest as little as €100,-. The platform will then transfer the money from all investors to the project developer, who purchases the property. From there, the property is managed by a professional team responsible for finding tenants, collecting rent, and making any necessary repairs or renovations.

The amount of interest you receive as an investor benefit per investment opportunity. At the moment, the average return on investments through Max Crowdfund is more than 10.0% on an annual basis. Investing through Max Crowdfund is therefore suitable for both short and long-term investments.

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Pros and cons of investing in real estate via crowdfunding

Pros

  • Often has higher returns than traditional forms of investing in real estate
  • Ensures that people with less capital can also invest in multiple properties
  • Accessible. Invest form €100,-
  • Eliminates common concerns that property owners and landlords often encounter
  • You don't need to have much knowledge of the real estate market, as investment opportunities are carefully selected by the crowdfunding platform committee.

Cons

  • Crowdfunding platforms may charge investors management or advisory fees
  • When you invest, it is impossible to exit until the investment period ends.
  • Participants must pay tax on any dividends they receive
  • Because investing in real estate via crowdfunding is a relatively new concept, few platforms have a long track record.
  • Investing in real estate via crowdfunding involves risks and may not be suitable for all investors. The value of your investment may fluctuate and may be influenced by factors such as interest rates, economic conditions, and changes in laws and regulations.

Frequently asked questions

Investors can already start investing from €100, or a multitude of this, into our loans that are backed by real estate. PLEASE NOTE that a fee of 0.1% of the invested amount will be charged. Therefore, it is important to add this 0.1% to your total investment amount when depositing money to your account, to make sure that you are able to invest your entire desired amount. In other words: when you want to invest €10,000 your Max Crowdfund account balance should be €10,010.
A maximum amount of €80,000 applies per individual investor in total for open investment opportunities on Max Crowdfund. In case you have qualified for a joint account with your partner, this maximum gets doubled to €160,000. However, when you invest €100.000 or more into one loan, this does not count towards your total amount in open opportunities. Business accounts are not limited to a maximum investment amount. Max Crowdfund has the possibility to set a maximum per individual investment though, regardless of the aforementioned. If your investment exceeds a limit that has been set, you will be notified accordingly.
Every investment has risks, including through crowdfunding. Therefore, read carefully the information that is provided with each investment opportunity. However, all investment opportunities at most crowdfunding platforms go through a team of real estate professionals to assess the risks. A risk class is then assigned to each project.
No. Investors have to be at least 18 years old and have an officially approved account. This entails that they have successfully submitted the Know Your Client (KYC) documents and that they have been officially authorized by us. Additionally, you are required to have linked your bank account to your Max Crowdfund account. Moreover, multiple different limitations apply per country, which means that clients from certain nationalities might be excluded from our platform to prevent money laundering, tax evasion, and other illegal activities from occurring. This is in line with our efforts to comply with the rules and to operate transparently.
Currently, we exclusively accept EURO (€) for investments.
According to Dutch law, you are entitled to a 24-hour reflection term, to cancel or adjust your investment without additional costs. After this 24-hour period, you can officially not cancel or adjust your investment anymore. Of course, Max Crowdfund is relatively flexible regarding this reflection period. This might mean that you could still do an additional investment or even cancel it as long as the loan's status is still 'open'. The investments that you have done will be combined into one when the investment opportunity closes and the loan becomes active.
Yes, but you are required to already have a joint bank account together with your partner. If this is the case, you could apply for registration of this account on Max Crowdfund. Once it gets approved, your legal investment limit will be doubled to €160,000.
You can register your bank account by completing a transfer from that account to your Max Crowdfund account of an amount of your choice. We can only accept bank accounts that are managed by yourself, and that are registered in your own name.
If you have only registered one bank account to your name, this automatically becomes your preferred bank account. In case you have registered multiple accounts, you can choose either one of them to be your preferred bank account. Funds in your Max Crowdfund account that are not used, for longer than 60 days, are automatically refunded to the preferred bank account that you have selected.
If a fundraiser fails to fulfill his/her obligations regarding the monthly interest payments as agreed upon in the loan terms, Max Crowdfund will take action accordingly. Periodical updates will then be shared with investors to inform you about the status of the payments. To recover from potential payment default, measures such as alteration of the loan's terms can be proposed. This does, however, require the approval of the weighted majority of the corresponding investors by ways of an online ballot. In case the majority endorses this proposal, the fundraiser could for instance be allowed postponement of the interest payments. In the worst-case scenario (the fundraiser cannot fulfill their financial obligations at all anymore) Max Crowdfund could even proceed to execute the real estate. The revenue, as a result, will subsequently be divided amongst the investors pro-rata. Max Crowdfund will always act for and on behalf of the investors.
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Investing in real estate via Max Crowdfund

New investment opportunities come online regularly. These are loans for which fundraisers are still seeking investors. As long as sufficient money has not yet been collected, you can invest in the real estate project by depositing an amount of at least €100. You can invest in several investment opportunities at the same time. The duration differs per investment opportunity; for example, this can be 6 months, but also 15 months. During this term, you will receive the agreed interest every month. After the term, you will receive the full amount invested. The interest rates shown with the loans are always on an annual basis.

When a project is 100% financed, the loan is closed. You then get another 24 hours to think about it, which means that you can still cancel your investment 24 hours after taking out the loan. After these 24 hours, we process the payment to the fundraiser. When the payment has been processed, the term (for example, 12 months) starts, and you receive interest on your investment. This is then transferred to your Max Crowdfund account. Here you can choose whether you reinvest the money in a new loan or whether you transfer it to your own bank account.

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What are the risks of investing via crowdfunding?

Every project is different. Each loan has different conditions, terms and interest rates. This ensures that the risks also differ per loan. In order to properly inform Max Crowdfund's investors about the risks, each loan is placed in a certain risk class. In addition, the loan to value (LTV), total loan value, additional information about the loan and various loan agreements are always provided when a new loan is published. This way, you can always make an informed decision.

Max Crowdfund offers extra security

Max Crowdfund has the first mortgage right in almost all cases. If this is the case, we also have priority over the tax authorities (tax authorities) or a bank.

First right to mortgage means that we have the first right to sell the underlying property and use the proceeds to repay our investors. As a result, in the event of an unexpected bankruptcy, we also have priority over the tax authorities (tax authorities) or a bank.

 

 

risks investing real estate crowdfunding

 

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Investing in real estate easy and quick

Before you can start investing via Max Crowdfund, it is necessary that you create an account on our platform. At the bottom of this page, you can find a step-by-step description of the registration and investment process.

Max Crowdfund is the real estate crowdfunding platform with the best conditions for investors. One of those, for instance, the average return on investment (ROI) via our platform is higher than 10%. Some fundraisers even offer Max Crowdfund users an annual interest rate of 12%.

Similar to other ways of investing, certain risks and securities are connected to investing in real estate crowdfunding projects, you can read more about those in the section below!

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Investing via Max Crowdfund, step-by-step

  • Project selection

    The real estate developer selects a property or project to be financed through crowdfunding and presents it to the platform for review and approval.

     

     

    Account_Registratie

  • Due diligence

    The platform conducts due diligence on the project, including reviewing financial projections, market research, legal documents and the exit strategy. All information will be visible on the platform when the project goes live.

     

     

     

     

    Aanvraag

  • Closing the project

    Once the project is fully funded, the funds will be transferred to the developer. The developer can then close on the property or project and begin construction or rehabilitation. It is known beforehand how long this will take.

     

    Volschreven

  • Management

     

    The property or project is then managed by the developer or sponsor, who oversees the construction or rehabilitation and generates rental income.

     

     

     

     

     

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  • Distributing the funds

    After the loan's financing is processed and its status has been adjusted to 'Active', the funds will be transferred to the project developer.

    The payment of interest will take place periodically and will be credited to your Max Crowdfund account balance. At the end of the loan's duration, additionally, you will be paid back your entire investment amount.

    If the required amount for the project has not been reached, the loan will be cancelled, after which all investors will receive their money back. It could take up to 2 to 5 days before your investment amount is put back into your account balance.

    Betaling

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