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. What does it mean exactly? Crowdfunding entails: raising money from the public. In the real estate world, this means that a project developer needs financing to purchase and/or renovate a real estate property. When many banks stop providing a loan, the crowd likes to invest in these types of projects. It regularly happens that banks do not finance a real estate project, despite the fact that the project is in perfect health.

With the money that the 'crowd' raises together to finance the purchase and/or renovation of the property, the project developer buys the real estate to resell or rent out the property. You could benefit from the profits by investing a minimum of €100,-. Over this deposited amount you will receive interest monthly. The interest rate that you as an investor receive, varies per investment opportunity. Currently, the average return on investment (ROI) at Max Crowdfund is 9.7%.

How does investing work?

New investment opportunities are published on our platform frequently. These are loans for which fundraisers are still seeking investors. As long as the required amount of money has not been raised yet, you can invest in the opportunity by depositing a minimum amount of €100,-. You can invest in multiple investment opportunities at the same time. The duration of the loan differs per project, this could for instance be 6 months, but also 15 months. Over the entire duration, you will receive a monthly interest, of which the rate has been determined prior. After the project's duration, your entire initial investment amount will be paid back to you. 

When a project has been 100% financed, the investment opportunity is closed. After that, you have 24 hours to reflect on your decision, this means that you could still cancel your investment within 24 hours after the loan has closed.  After the 24 hours have expired, we will transfer the financing to the fundraiser. When the payment has been processed, the duration (of 12 months for instance) starts and you will receive the interest on your investment every month. These interest payments are added to your Max Crowdfund account. From there you can choose whether you want to re-invest this money into a new loan, or you want to transfer it back to your bank account.

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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.
On the Max Crowdfund platform, you have your own personal account. You can easily complement your account balance by using one of the payment providers' services such as iDeal, or by making a transfer from your bank account. Once the deposit has been added to your balance, you can start investing. The maximum deposit amount varies per bank but often is set at €50,000 per transfer. Whenever you want to make a deposit to your account, please do not forget to add your corresponding payment reference in the description. It is also essential to keep in mind that a bank transfer could possibly take up to more than one working day. Due to this, you could potentially miss an investment opportunity because sometimes investment opportunities are filled in an instant.
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. Our aim is to eventually be able to accept all currencies. Potentially even crypto, like we are already doing for Max Crowdfund share certificates. However, this is dependent on the authorities since we naturally want to comply with the laws and regulations.
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.

Investing via Max Crowdfund

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 9.7%. 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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Risks and collateral

What are the risks?

Every project is different. The loan terms, durations, and interest rates are variable for each investment opportunity. This causes the risks that are connected to each particular loan, to also be different. In order to inform investors at Max Crowdfund as well as possible, every single loan gets classified in a certain risk class. In addition to that, the Loan to Value (LTV), Total Loan Cover (TLC), extra information about the loan, and multiple other terms of the loan will always be indicated whenever a new loan gets published as an investment opportunity on our platform. This allows you to always make a deliberate decision.

Max Crowdfund offers extra security

Max Crowdfund almost always has first mortgage rights. When this is the case, we also take precedence over for instance tax authorities or banks regarding ownership of the subordinate real estate property. 

Us having first mortgage rights means that Max Crowdfund would become the rightful claimant of the real estate that was connected to the financed loan. We will sell the property and with the revenue, we are able to pay back our investors. Because of this, in the case of an unfortunate bankruptcy of the project developer, we would still additionally take precedence over tax authorities or banks.

Investing via Max Crowdfund, step-by-step

  • 1. Register/Log in

    If you are new at Max Crowdfund, first, you will have to create an account on our website. Click on the 'Register' button, this will take you to our registration form box in which you have to fill in your first name, e-mail address, and phone number. Then, click on the 'Create account' button. 

    Please check your inbox (including the SPAM folder if necessary) and verify your e-mail address to proceed with the registration. After this, you will be able to set up your personal password. This password has to contain at least 8 characters, of which one capital letter, one number, and one symbol. We will never ask you for your password ourselves.

    Subsequently, click on the button 'Save and login'. When logging in for the first time, you have to fill in a one-time verification code (OTP). Click the button 'Send one-time code', and go to your inbox to open the mail that contains the 6-digit verification code. 

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  • 2. Know Your Customer (KYC) Procedure

    The first step of the KYC procedure consists of verifying your identity. Please select your date of birth, country of origin, and the preferred identification method (ID Document).

    The next step is submitting the KYC, this is required at all times when a customer creates an account at Max Crowdfund. Because we have to keep a record of whom we conduct business with, as an AFM-registered organization.

    First, you fill in your address, followed by your city of residence, and postal code. Then the corresponding country. After this, click 'Next', and select your preferred ID document with which you will identify yourself: either your passport, driver's license, or residence permit.

    It is essential to submit a clear photo of the ID document, all corners need to be visible. Please remove any cover if necessary. Click on 'Upload document', then select the photo of your document and click on 'Open'.

    At the next step of the procedure, you need to take a selfie. Look into the camera of your device, and make sure your entire face fits into the frame. Then, slowly move your head in a circular motion to make a 3D-scan. After your identity has been verified, you can continue to the next step.

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  • 3. Compliance questions

    You are asked to fill in a short compliance questionnaire, consisting of 4 questions.

    It is important to answer the first two questions with "No", and the final two with "Yes". However, customers naturally have to answer these questions truthfully.

    The compliance confirmation questions you will be asked are: "Are you a US person?", "Are you a politically exposed person (PEP)?", "Are you the beneficial owner of this account?", and "Do you confirm all information provided is correct?".

    You get the chance to take a look at your answers again and to adjust your answers if necessary. When all information is correct, click on 'Submit'.

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  • 4. Bank transfer

    Your profile is almost complete now. The next step is to register your bank account. To do this, you have to transfer a chosen amount, with a minimum of €0.01, from your bank account to your Max Crowdfund balance.

    You could complete the transfer via an iDEAL-payment, or you could manually transfer it yourself, to our BUNQ account.

    BUNQ: NL71 BUNQ 2035 2101 86

    Please do not forget to add the payment reference!

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  • 5. Investing

    After your account has been successfully verified, you can start investing. When you want to invest in an opportunity, click on the green 'Invest' button of the corresponding loan and fill in your preferred investment amount. The minimum amount is €100 per investment. 

    Please note that you need to have a sufficient balance on your account before you can invest.

    With a personal account, you can invest a maximum of €80,000 per opportunity. In case you have a joint account with your partner, which is registered to your account, the maximum investment amount becomes €160,000.

    If you have a business account, or if you have connected your company to your personal account, you are allowed invest without a limit.

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  • 6. Create your personal investment portfolio

    All investment opportunities are published on our platform. When you scroll up to step 5, you find an example of what such a published loan looks like. Here you can view the basic information about the loan.

    If you click on the 'More info' button, you will be redirected to the loan's page where you can find all the relevant information that you need in order to make a deliberated decision on whether you want to invest in the opportunity, or not.

    Because you are the one that decides which project you invest in, you are essentially creating your own personal investment portfolio. You can view it in your account, under 'My investments' 

    Up until 24 hours after your investment, you are still able to cancel or adjust your investment. When the financing has been transferred to the fundraiser, and thus, the loan has been activated, this is not possible anymore.

    If you have canceled your investment, please keep in mind that it could take a few hours to process your deposited amount and put it back into your Max Crowdfund account balance.

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  • 7. 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 monthly, 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 canceled, 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.

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