Do you have surplus cash and are looking for profitable investments? But you don’t know how to grow your savings while interest rates are negative and unlikely to rise anytime soon?
Today, you can no longer rely on having a savings account to earn a return. Traditional bank savings no longer even protect against inflation. It’s time to explore other forms of investment to make your savings work for you. Real estate crowdfunding is one such option, but you still need to know how to proceed.
That’s what we invite you to discover in this article.
Real Estate Crowdfunding: A Genuine Alternative to Invest Directly in Real Estate
Real estate crowdfunding allows multiple co-owners to invest together in an income-generating building.
The real innovation of crowdfunding investment is that each share (or fraction) of the co-owner is not just linked to a specific apartment but to the entire building, itself made up of several apartments, which offers the following advantages:
Dilution of Rental Risk
An investor who buys an individual apartment receives rental income only if it is rented to a third party. If it is vacant or the tenant fails to pay rent, the investor is directly affected.
Real estate crowdfunding allows you to hold a share of several apartments within the same building, entitling you to a portion of the rental income from each of these apartments. Moreover, the investment amount is often lower than that required to acquire a single apartment.
In this situation, if a tenant leaves or defaults, the impact of this income interruption is greatly reduced because each investor owns only a fraction of that apartment. Your risk is therefore diversified across multiple apartments and numerous tenants.
Shared Interests
With real estate crowdfunding, all investors share a common goal: to generate returns.
Making decisions about the management and maintenance of the building remains straightforward since all investors’ interests are aligned and they share the same objectives.
Liquidity and Flexibility
Unlike the ordinary purchase of an apartment, real estate crowdfunding offers the possibility, if necessary, to withdraw part of the capital invested in the building. This is made possible through the establishment of a secondary market.
This advantage is significant compared to an apartment owner who, for example, would have to sell the entire property. It provides real flexibility in case of unforeseen events.
The Advantages of Crowdfunding
Benefits
- Much more attractive returns (between 5% and 8% per year) that are less volatile than those of traditional equity classes;
- Diversification of your investments by investing in multiple projects, thereby reducing risks;
- A lower risk profile compared to other asset classes offered on the market, with regular income;
- Properties rigorously selected by crowdfunding platforms to ensure a low risk of project failure;
- Intelligently grow your savings, which would otherwise sit idle in a bank account without any prospect of return.
How to Invest with Real Estate Crowdfunding?
1- Choose Your Crowdfunding Platform
Before investing, choose the crowdfunding platform that meets your expectations with quality real estate projects. Also, find out about the minimum investment amounts required by the platform and the frequency of income distribution (monthly, quarterly, annually).
2- Create Your Online Account
You must first register and create an online account on the selected crowdfunding platform.
Most platforms offer free registration with no obligation.
3- Invest in One or More Properties
You can now analyze the investment opportunities offered and invest the amount of your choice in each selected property.
Most platforms require a minimum initial investment amount (which can range from CHF 20,000 to CHF 100,000).
Trust platforms that ask you to transfer your investment directly to the Notary’s account. This is a security guarantee ensuring that your money belongs to you and remains available.
6- Confirm Your Investment
Some platforms take the time to validate your invested amounts and authenticate you with the Notary for future procedures before finalizing your investment process.
7- Collect Your Income
Benefit from the income of your projects and finally reap the rewards of your investment once the financing of a property is completed.
What You Should Remember
Real estate crowdfunding is the most attractive solution in terms of risk-return profile among the asset classes currently offered on the market.
It brings a new form of investment that opens up to the general public to democratize access to the real estate market, previously reserved for a select few.
Also, to ensure optimal investment quality when choosing the platform you want to use, you can consider the following criteria:
- the quality and location of the presented buildings,
- the minimum investment amount required,
- the frequency of rental income distribution.
Once your analysis is complete, our advice is to start investing in real estate. It will help you preserve your capital and obtain returns in the form of an annuity.
Get started with real estate crowdfunding because the system is recognized, reliable, and provides access to this asset class in a transparent way.
For more information about real estate crowdfunding in Switzerland, we invite you to consult the guide How to Generate 6% Regular Income with Real Estate in Switzerland?
