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 benefits of real estate crowdfunding 

One of the main benefits of real estate crowdfunding is that it allows investors to access a broader range of properties than they would be able to on their own. Traditional real estate investing typically requires a significant amount of capital, which can be difficult for many people to come by. With crowdfunding, however, investors can pool their money together to purchase properties that would otherwise be out of reach.

Another benefit of real estate crowdfunding is that it allows investors to spread their risk across multiple properties. If one property doesn't perform as well as expected, the investor's overall return on investment will not be as affected.

Overall, real estate crowdfunding is a great way for people to invest in real estate properties without putting up a large amount of capital or taking on a high level of risk. By pooling their money together, investors can access a broader range of properties and spread their risk across multiple properties. However, as with any investment, it is essential to research and considers your risk tolerance before investing.

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How does investing via real estate crowdfunding work?

contribute smaller amounts of money to fund a real estate project, rather than relying on a single lender or investor.

The process of real estate crowdfunding typically starts with a real estate developer or sponsor identifying a potential project, such as a new construction or a redevelopment opportunity. They then create a crowdfunding campaign on a platform that specializes in real estate crowdfunding.

The campaign includes details about the project, such as the location, the estimated costs, and the projected returns. Investors can then review the campaign and decide if they want to invest.

Investors can invest as little as €100,- in a single real estate crowdfunding campaign and can diversify their portfolio by investing in multiple campaigns. In exchange for their investment, investors receive a share of the returns when the property is sold or when the investment is liquidated.

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

New investment opportunities are published on our platform frequently. These are real estate crowdfunding loans for which fundraisers are still seeking investors. As long as the required amount of money has not been raised, 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 loan duration 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. 

The investment opportunity is closed when a project has been 100% financed. After that, you have 24 hours to reflect on your decision; 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.

Platform features

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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What steps does a real estate crowdfunding project go through?

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, also to be different. To inform investors at Max Crowdfund as well as possible, every single loan gets classified in a particular risk class. In addition, 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 always to make a deliberate decision. In general, the risks of real estate crowdfunding are:

  1. Limited liquidity: Real estate investments can be illiquid, meaning it may be difficult to quickly sell your investment if you need to access your funds.

  2. Lack of control: As a passive investor in a crowdfunding platform, you have limited control over the property or project in which you are investing.

  3. Risk of fraud: As with any investment, there is a risk of fraud in real estate crowdfunding. It's important to thoroughly research the platform and the properties/projects being offered before investing.

  4. Risk of market downturn: Real estate markets can be cyclical, and a downturn in the market can negatively impact the value of your investment.

  5. Risk of default: The borrower may default on their loan, leading to a loss of the invested money or the property.

It's essential to weigh the risks against the potential returns before investing in real estate crowdfunding. It's also important to consider the borrower's creditworthiness and the project's overall financial stability.

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.

     

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  • 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
  • Launching the project

    The project is then marketed to potential investors on the platform. The project will be on the website for 24 hours before anyone will be able to invest so that everyone can take their time in considering whether they want to invest in this project or not.

     

  • Closing the project

    Once the project is fully funded, the developer or sponsor can then close on the property or project and begin construction or rehabilitation.

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  • Management

    The property or project is then managed by the developer or sponsor, who is responsible for overseeing the construction or rehabilitation and generating 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 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.

    Betaling

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