Who is the borrower?
The borrower may be a project company or an entity linked to the developer. It should be distinguished from the platform, and its assets, liabilities and intended repayment sources should be understood.
Participatory real estate lending
Real estate crowdlending in Switzerland.
Real estate crowdlending allows several investors to lend to a company financing a transaction. The contract defines the borrower, rate, term, repayment terms and any security.
An interest rate does not summarise the investment. Repayment capacity, the loan's place in the financing structure and the actual value of protections are essential to assessing risk.
Mechanics
What is a participatory real estate loan for?
Financing may complement equity and bank debt to acquire, build, renovate or refinance an asset. The precise use of funds and drawdown conditions should be documented.
Where does the return come from?
Interest compensates for making capital available and assuming risk. It may be paid during the loan or at maturity, but payment depends on the borrower's ability to meet its obligations.
How is principal repaid?
Repayment may come from a sale, bank refinancing, rental income or other planned resources. Investors should assess the credibility of the exit and alternatives in case of delay.
Term and payment
Bullet, amortisation and extension.
Bullet repayment
With a bullet loan, principal is repaid once at maturity. Interest may be paid periodically or together with principal. This structure concentrates repayment risk at the end of the loan.
Amortising loan
An amortising loan repays part of the principal progressively. Remaining exposure falls with each payment, provided the borrower follows the schedule.
Term extension
A real estate transaction may be delayed. Check whether the contract permits an extension, who can approve it, for how long and at what rate. An extension is not a repayment.
Illustrative example
Capital of CHF 25'000 at 8% per year for 12 months would generate CHF 2'000 in gross simple interest. This example excludes fees, tax, delays and default and does not describe an S2I offer.
Security
Mortgages, mortgage notes and repayment ranking.
Security creates a defined right over an asset or against a guarantor. It must be assessed alongside senior claims and the value that could realistically be recovered through enforcement.
Mortgage note
A mortgage note is an instrument linked to a claim secured by property. Its presence alone is not enough: investors should know who holds it, its rank, amount and enforcement terms.
First-ranking and subordinated claims
A first-ranking claim is paid before junior rankings from available proceeds, although costs and legally senior claims may intervene. A subordinated claim absorbs a decline in value sooner.
Security does not guarantee an outcome
A forced sale may take time and realise less than the estimated value. Security may reduce a potential loss without removing delay risk or ensuring full repayment.
Risks
Default, delay and loss of capital.
Operational risk
Cost overruns, technical defects, appeals, delayed permits or insufficient demand may weaken project cash flow and postpone repayment.
Financial risk
Higher financing costs, unavailable refinancing or excessive leverage may lead to default. A promised rate does not automatically compensate for poorly understood risk.
Liquidity risk
Lenders generally cannot demand early repayment or easily resell their claim. They must be able to hold the investment for its full term, including a possible extension.
Method
Assess a real estate loan
Project quality matters, but the loan structure determines how investors are paid and protected.
01Identify the borrower and the precise use of funds
02Understand the repayment source and schedule
03Place the loan within the project's full debt structure
04Review security, ranking and limitations
05Test scenarios involving delay, falling values and default
Frequently asked questions
Key points to understand before investing.
What is the difference between real estate crowdlending and crowdfunding?
Crowdfunding is the broader category of participatory finance. Crowdlending is loan-based: the investor is a creditor rather than a project co-owner, unless a specific structure explicitly states otherwise.
What is bullet repayment?
It means principal is repaid in a single payment at maturity. Interest may be paid during the term or at the end depending on the contract, so principal remains exposed throughout the loan.
Does a mortgage guarantee repayment?
No. It creates security over property, but forced-sale proceeds may be insufficient after costs and senior creditors are paid. Ranking and realisable value must be assessed.
What happens if repayment is delayed?
The consequences depend on the contract and may include an extension, additional interest, negotiation, enforcement or recovery proceedings. These steps can take time and do not guarantee full repayment.
Related guides
Deepen your real estate analysis.
Investor area