Previously, real estate investments were only available to wealthy or institutional investors. However, real estate crowdfunding platforms have made this high-return industry more accessible. Although real estate crowdfunding in Europe is still in its development stage compared to other investment options, it has become increasingly popular due to recent significant improvements, with many platforms operating across the continent and thousands of projects funded.
In this article, we’ll review the main factors to consider while searching for the best real estate crowdfunding platforms and present a list of some of the finest real estate crowdfunding platforms for German investors.
What is real estate crowdfunding?
Real estate crowdfunding is a technique used by developers to obtain cash and finance their projects from “the crowd,” whether for remodeling, construction, or simply rental management. Real estate crowdfunding platforms connect developers with potential investors, who may want to get exposure to real estate with a small amount of money and earn a good interest in return. Unlike direct property ownership, investors do not have to worry about property management or paperwork. They just invest, and the interest they earn is determined mostly by the project’s type.
About Real Estate Crowdfunding in Germany
Crowdfunding has already become widespread in the real estate sector, with a market estimated at $10.78 billion in 2021. According to the Real Estate Crowdfunding Report 2021, a research project by Walliance and Politecnico di Milano, Germany is the third largest real estate crowdfunding market in terms of inflows in 2021, estimated at €168 million. Many platforms provide investment opportunities in Germany, while others allow German investors to participate in real estate investment projects in other European countries.
Several factors should be examined when looking for the platform that best suits your needs. To create a portfolio with diversified real estate exposure, you might want to look for a platform that offers investment opportunities from multiple countries. On the other hand, if you plan to take your gains regularly, you should look at the fee structure (particularly withdrawal fees). Furthermore, you may wish to pick a platform with a secondary market if you want to liquidate your holding easily. Finally, if you are a more risk-averse investor, you may want to look into the platform’s history and the default rate of its previous projects.
Best Real Estate Crowdfunding Platforms in Germany
Here’s some information about the best real estate crowdfunding platforms available for German investors, based on our assessment:
Crowdestate is one of the most well-known real estate investing platforms in Europe. The platform provides excellent diversification opportunities as its projects include various property types (residential, retail, office, and healthcare buildings) and are spread across Europe (Estonia, Finland, Latvia, Poland, Slovakia, Romania, Italy, and Portugal). Crowdestate was founded in 2014, and its projects include rental, development, and renovation, in addition to business financing. Even though they currently do not have investment opportunities in Germany, almost 700 German investors used the platform to invest in real estate across Europe.
Exporo is a real estate crowdfunding platform focusing on the German market, and offering two products: Exporo financing (for short-term debt investment opportunities) and Exporo inventory (for long-term equity investment opportunities). It was founded in 2014.
Based in Estonia, EstateGuru is a real estate crowdfunding platform that focuses primarily on short-term property-backed loans (the average loan term is 14 months). The real estate projects cover several European countries, such as Estonia, Lithuania, Germany, Latvia, Finland, Spain, Portugal, and Sweden. It was founded in 2014.
Established in 2015 and based in Vienna, Rendity is a real estate crowdfunding platform focusing on projects in Austria and Germany only. It provides various types of investment like Rendity Income and Rendity Growth.
Founded in 2012, Bergfürst gives access to real estate loans with projects in Germany, Austria, and Spain. The average project duration is between 2 and 3 years.
Features of real estate crowdfunding platforms
When considering real estate crowdfunding platforms, it is worth checking the main features of the platform, such as minimum account balance, fees charged, availability of secondary market and auto investing.
- Fees: Unlike brokers in Germany which charge a fee or spread on each transaction, real estate crowdfunding platforms do not charge fees on lenders (people like you), they rather charge it on borrowers. Still, some platforms might put commissions on withdrawals, or impose a success fee whenever the return on investment is above a certain rate.
- Secondary market: Many platforms offer secondary markets where investors can sell their investments and exit their positions anytime. Some platforms charge a fee on transactions executed on the secondary market, so it is worth checking those fees before proceeding with the transaction.
- Auto-invest: Some platforms offer an auto-invest feature allowing investors to automatically invest available funds based on predetermined criteria.
- Bonuses: If you’re an experienced investor, you might know some companies that offer a signup bonus for investors, like the Trading 212 promo code offer. Remember that while it might be a good perk to receive a free bonus, it shouldn’t be the only reason you decide to invest through a particular crowdfunding platform.
Comparing features of the best real estate crowdfunding platforms in Germany
|Platform||Account Minimum||Fees||Secondary Market||Auto-invest|
|Crowdestate||€100||No fees on deposit or withdrawal||Yes (subject to 2% fees)||Yes|
|EstateGuru||€50||€1 per withdrawal, inactivity fee of 2.5€/monthly||Yes (subject to 2% fees)||Yes|
|Rendity||€100||No fees||Not available||Yes|
|Bergfürst||€10||No fees||Yes (subject to €10 fee per listing / purchase)||Yes|
Each real estate crowdfunding platform publishes key metrics regarding the projects funded throughout the years. We recommend checking this statistics page as it indicates the platform’s efficiency in offering successful and profitable projects to investors. Some key metrics are presented in the table below, such as the number of investors, the number of projects funded, historical return, and cumulative amount raised.
Comparing some metrics of the best real estate crowdfunding platforms available for German investors
|Platform||Number of investors||Number of projects||Historical return||Cumulative amount raised|
|Rendity||Not disclosed||160+||6.30%||€112 M+|
|Bergfürst||Not disclosed||70+||6.40%||€100 M+|
Why is Crowdestate one of the best real estate crowdfunding platforms for German investors?
Based on the above comparison tables, I believe Crowdestate is among the best real estate crowdfunding platforms for a German investor looking for European real estate exposure. Here are a few reasons why I believe it has an advantage over other platforms and why I think you should consider it when looking for a suitable real estate crowdfunding platform:
- A rigorous due diligence process: Crowdestate chooses only the best investment opportunities to investors after conducting an extensive background check on projects’ information, business plans, and financial models.
- A low minimum balance required: With only €100, an investor can start investing from almost anywhere in the world.
- Secondary market available and active: 33.11% of investors are active in the marketplace. As such, whenever an investor needs to exit the market, he might be able to find a potential buyer faster.
- Diversified projects: The projects offered on the platform are well diversified geographically and across different types (residential, commercial, and business financing).
- Low fee structure: Unlike several real estate crowdfunding platforms, Crowdestate does not charge any commission on withdrawals. However, it charges a 2% commission on transactions conducted on the marketplace and a success fee (typically 20%) over the 8.00% hurdle rate per year.
- Auto-invest: Crowdestate allows investors to automatically invest the funds available in their account according to specific parameters such as investment amount, expected interest rate, investment term, type of investment and country.
Real estate crowdfunding is a relatively new investment vehicle in Europe and in Germany particularly. Nonetheless, it has risen in popularity in recent years as new platforms have entered the market and are offering more diverse projects. It is a simple strategy to increase exposure to the real estate sector at a cheap cost (in some cases, without any cost). Furthermore, investors can begin investing with a small sum of money. On the downside, while some platforms provide secondary markets, real estate crowdfunding is less liquid than other investment options such as forex or stocks—both of which are available through well-known brokers, such as eToro or the US-based Robinhood and TD Ameritrade.
This article presents a few platforms we consider among the best real estate crowdfunding platforms available in Germany. We encourage you to check their websites, read about the projects, and check the investment process before deciding where to invest.