If real estate is a key investment for the French, not everyone is destined to become landlords. Solution ? Turning to rock paper, investing their money in sector financing products… In addition to various classic equity funds and investment companies (SCPIs), more and more investors are turning to crowdfunding.
Since the market regulation in France in 2014, crowdfunding has experienced exponential growth, breaking all records in 2021. That year, 958 million euros were raised through about forty web platforms, 90% more than in 2020, according to the published barometer. from Fundimmo.com, one of the top five players in the field.
In line with the co-financing trend, real estate crowdfunding allows people to invest their savings directly into the projects of professionals, in this case those of developers and sellers. And unlike a fund that distributes your money left and right, here you decide which operations you want to support.
In practice, in essence, it will be about housing finance, which France is still and always lacking, knowing that they make up 81.7% of projects in 2021, according to the Fundimmo barometer. This is followed by offices (9.8%), shops (9.7%), hotels (3.8%), as well as miscellaneous equipment and repairs (2.2%). In terms of location, Île-de-France, the PACA region and Auvergne-Rhône-Alpes make up 74% of the collections.
If crowdfunding is so popular, it’s because it offers several benefits. First, it democratizes real estate investment, making it accessible to medium-sized savers, while it used to be available to very large investors. As Benoît Bazzocchi, President of Fundimmo, explains to us, “As a rule, you can invest in a project from 1,000 euros, which remains affordable and allows you to multiply projects to spread the risks.”
Moreover, crowdfunding allows you to freeze funds for a short period of time in exchange for a high reward. “Operations last from 12 to 36 months, the yield varies from 8 to 10%,” the specialist clarifies. Thus, the average investment period reached 21.2 months at an annual rate of return of 9.21% in 2021, according to the industry barometer. However, be careful and consider delays in the construction and sale of goods, which can lead to a delay in reimbursement (6.61% in 2021) and thereby immobilize your money even more.
Despite the strong arguments in favor of crowdfunding, you should not set the wrong goal. “This is a tool for diversifying assets with a set of higher returns and risks,” Benoit Buzzocchi said. Therefore: “You should already have classic and safe savings” before launch. Indeed, crowdfunding does not offer any capital guarantee, which means that one must accept and especially be able to absorb possible financial losses, and this even if the default repayment rate of the sector was capped at 0.09% in 2021.
So to put the odds in your favor, we apply the adage that we don’t put all our eggs in one basket! It is obvious that you are only investing a fraction of your savings in crowdfunding and prefer to bet small on many projects rather than investing a lot of capital in one real estate program. Ideally, it is also better to diversify the intermediary platforms.