You have probably heard of real estate crowdfunding, a new way of investing in real estate that is becoming increasingly popular. But do you really know what real estate crowdfunding is and how it works?

Crowdfunding is a form of micro-patronage that allows people with personal or professional projects to obtain financing without resorting to banks or financial institutions. The system is very simple: the person who needs financing explains their project and what they need to bring it to fruition, and dozens, hundreds, or even thousands of micro-investors contribute their grain of sand to make it possible. These contributions may be purely supportive or rewarded in some way in the future.

The same logic, applied to the real estate market, gives rise to real estate crowdfunding: a collaborative investment system that allows people to buy properties or invest in real estate developments by pooling contributions from several individuals. This cooperative investment generates capital gains in the future when the property is sold or rented.

What is real estate crowdfunding?

Real estate crowdfunding is an increasingly popular system among investors because it allows them to invest in real estate capital. In fact, it enables participation in real estate investment projects from as little as €50 through so-called real estate startups or proptech platforms, which act as intermediaries between investors and real estate developers.

These platforms usually operate entirely online, so the companies managing them analyze the market and find suitable investment opportunities. This means that the investor does not have to worry about anything. It also allows people who are not very familiar with the real estate market to invest with a certain degree of security and convenience.

Although it is still a relatively new real estate investment model, real estate crowdfunding is growing at a strong pace. According to data from Statista, in 2021 alone crowdfunding in Europe moved a total of $822 million. In Spain, real estate investment represents 17.55% of the total capital raised through crowdfunding.

Since real estate crowdfunding is simple, profitable, and accessible to everyone, it is expected that more and more people will invest in real estate through this system. Real estate consulting firm Facts & Figures, for example, predicts that by 2027 the figure will grow by more than 30%.

How does real estate crowdfunding work?

Now that we know what real estate crowdfunding is, let’s see how it works: it follows the same basic principles as crowdfunding for personal or professional projects.

The starting point is a project that requires financing. It could be a real estate developer who wants to build or renovate a property, or a company that wants to buy an abandoned village and turn it into a tourist resort, or any other project. This project comes to the attention of a real estate startup that believes it may be of interest to its clients. The company selects the project and publishes it as an investment opportunity.

Investors access this offer entirely digitally, from a computer or mobile device, and make an investment. This investment may take the form of a loan with a specific interest rate or involve participation in the developer’s future profits.

Normally, in real estate crowdfunding, you can invest very small amounts at highly affordable levels, although there are limits. In Spain, the law sets an investment limit for non-professional investors at €1,000 per project and €10,000 in total, distributed across 10 or more projects.

Then, you simply wait to receive the returns. Returns in real estate crowdfunding typically range between 8% and 15% annually.

Advantages of real estate crowdfunding

Real estate crowdfunding, as we have seen, offers certain advantages compared to traditional real estate investment models. These advantages are as follows:

• It is possible to invest without having large amounts of capital. While traditional forms of investment required a significant amount of money (at least enough to purchase a property), real estate crowdfunding allows for very low investments, in some cases starting at €50.
• The possibility of investing with very little capital makes investment accessible to middle- and even low-income individuals, democratizing access to the real estate market. Real estate crowdfunding also allows you to invest without having extensive knowledge.
• It facilitates the fundraising process for developers and real estate agencies. Thanks to real estate crowdfunding, small projects can be launched without support from banks, or it can be combined with bank loans. Both financing methods are compatible and can be complementary.
• It simplifies contact between small investors and developers and real estate agencies. Proptech companies handle project research in the market. They look for projects that need to be financed. This means that anyone who wants to invest can do so by accessing a selection of projects that have already been chosen and reviewed.
• It allows you to invest in other markets. Real estate crowdfunding operates transactionally, meaning you can invest in properties around the world without traveling. This was not previously available to small investors, as it required studying the specific market in question.
• It allows for diversification of investments. By not requiring the purchase of an entire property or a large capital outlay, real estate crowdfunding makes it possible to spread invested capital across different projects. This generally results in greater investment security, as losses in one project may be offset by profits in another.
• It reduces the financial costs associated with the transaction.

Disadvantages of real estate crowdfunding

Obviously, real estate crowdfunding also has some disadvantages compared to traditional investments, and it is important to take them into account. The most important ones are the following:

• It is still a form of investment and, therefore, carries risk.
• This is a very recent form of investment, so it is not properly regulated everywhere. The regulations governing it in Spain are very recent, dating back to 2015, and may have certain flaws, which can generate some uncertainty.

Different Types of Real Estate Crowdfunding

Although these platforms operate under similar frameworks, there are different types of real estate crowdfunding models. The main ones are outlined below:

• Donation-Based: In this case, there is no financial return. Contributions are made as donations without profit expectations. It is the simplest form of crowdfunding for obvious reasons.
• Crowdfunding (Lending Model): Investors contribute capital in exchange for a return. In real estate crowdfunding, this often resembles a loan model, where the invested capital is repaid along with agreed-upon interest once the project is completed.
• Equity Participation: Investors acquire a stake in a company, similar to purchasing shares. Returns depend on the company’s future performance and may vary.
• Crowdfactoring: In this model, the investment is typically short-term. The invested capital entitles the investor to receive the amount of an invoice issued by the company. In other words, the company sells its product or service on deferred payment terms, and the investor advances the funds in exchange for repayment once the invoice is settled.

Tips for Investing in Real Estate Crowdfunding

Now that you understand what real estate crowdfunding is and how it works, you may be considering getting started. Before you do, keep in mind that although it allows for relatively accessible and convenient investments, it remains an investment model that carries risk. Therefore, it’s important to follow some basic guidelines to help mitigate those risks.

• Stay properly informed about the various real estate crowdfunding platforms, as not all operate under the same model. Understanding how each platform works and reviewing its specific investment terms will help prevent unexpected issues in the future.
• Avoid concentrating your investment in a single project: The structure of this type of real estate investment allows smaller investors to allocate capital across multiple projects without requiring large amounts of money. Diversification helps reduce overall risk and may also provide additional benefits, such as exposure to different markets and currencies.
• Carefully evaluate each project offered: While one of the advantages of real estate crowdfunding is the ability to invest without in-depth market expertise, conducting your own research is always essential. As with any investment, risk is inherent.

Who Can Benefit from Crowdfunding?

Crowdfunding can be leveraged by a wide range of individuals and organizations. Below are some examples:

1. Entrepreneurs and Startups:
   • Initial Capital: Entrepreneurs can use crowdfunding to raise seed capital to launch their businesses.
   • Product Validation: Test market demand for a new product or service before launch.
2. Small and Medium-Sized Enterprises (SMEs):
   • Expansion: SMEs can leverage crowdfunding to scale their operations, develop new products, or enter new markets.
3. Investors:
   • Diversification: Investors can diversify their portfolios by allocating capital across multiple projects through crowdfunding platforms.
   • Access to Opportunities: Enables investors to participate in opportunities that were traditionally reserved for large investors or institutions.
4. Creatives and Artists:
   • Artistic Projects: Artists, musicians, filmmakers, and other creatives can fund initiatives such as albums, films, exhibitions, and more.
   • Engagement: Build a community of supporters who feel connected to and invested in the project.
5. Non-Profit Organizations:
   • Fundraising: NGOs and charitable organizations can use crowdfunding to finance specific projects, relief campaigns, and other initiatives.
   • Awareness: Increase visibility for your cause and attract new donors.
6. Real Estate Projects:
   • Developers: Real estate developers can leverage crowdfunding to finance new developments, renovations, and other property-related projects.
7. Technology Innovators and Developers:
   • New Technologies: Innovators can finance the development of new technologies, applications, and other tech-driven products.
   • Prototyping and Development: Funding the creation of prototypes and early-stage development before seeking larger rounds of investment.
8. Community and Social Projects:
   • Community Initiatives: Projects aimed at improving local communities—such as the construction of parks, community centers, and other social initiatives—can raise funds through crowdfunding.
   • Social Movements: Support for social initiatives and campaigns aimed at generating positive change within society.

In general, any individual or organization with a project in need of funding—and capable of attracting public interest—can leverage crowdfunding to achieve their objectives.

Main Real Estate Crowdfunding Platforms in Spain

Although real estate crowdfunding is still a relatively recent investment model, its growth in Spain has been steady in recent years. In 2020, there were 327 platforms with a total of 8,700 employees. According to the PropTech Observatory 2020, 87% of them operated under a B2B model.

Although these platforms operate under a similar model, each has distinct characteristics that set it apart. If you’re unsure which one best fits your investment profile, here are some of the most relevant differences.

URBANITAE

Urbanitae is probably the simplest, most accessible proptech platform open to small investors among those operating in Spain.

It is a crowdfunding platform specializing in both residential and commercial real estate. Investments typically start at €500 and may include rental properties as well as assets intended for resale.

Its key strengths include high-quality projects, competitive returns, and strong customer support.

REINVEST24

Among real estate startups focused on rental investments, Reinvest24 is one of the most prominent. It manages a diversified portfolio of properties across Europe, targeting strong returns for investors.

STOCKCROWD IN

Unlike other real estate crowdfunding platforms, StockCrowd IN focuses on financing new construction developments. It partners with well-established developers and aims to offer an attractive risk–return profile.

BRICKSTARTER

Brickstarter primarily operates in the short-term rental market, identifying opportunities through Big Data analysis of platforms such as Airbnb and Booking. Project profitability is generated through both rental income and property sales.

One of the main advantages of this proptech compared to others is the low minimum investment threshold—starting from just €50. This makes it an attractive option for new investors seeking diversification opportunities. Additionally, it is designed for retail investors, many of whom are not professionals, and it provides clear and detailed information about each investment opportunity.

It is an excellent platform for getting started in real estate crowdfunding while maintaining a relatively conservative risk profile.

ESTRATEGURU

Estrateguru focuses on the marketplace for mortgage-backed loans. It also allows investments starting at €50. Like Brickstarter, it operates in multiple countries, including Spain. A key advantage of this platform is its strong recovery track record, with virtually no unrecovered loans. Since these are mortgage-backed loans, the underlying property can be foreclosed if necessary, helping to secure the investment.

Other notable real estate crowdfunding platforms include Housers, Bricks&People, Inveslar, and Inviertis.

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How Much Do Crowdfunding Platforms Charge?

Crowdfunding platforms charge different types of fees depending on their business models and the services they provide. Below is an overview of the approximate fee structures for the platforms mentioned:

1. Urbanite:
   • Management Fee: Urbanitae charges a fee for managing the project, which may vary but is generally around 2-5% of the capital raised.
   • Success Fee: Upon completion of the project and distribution of profits, Urbanitae typically charges a success fee ranging from 5% to 10% of the profits earned.
2. Reinvest24:
   • Investment Fee: Reinvest24 charges an initial investment fee of approximately 2% of the invested amount.
   • Management Fee: An ongoing management fee may also apply, typically around 1% per year of the investment value.
   • Exit Fee: In some cases, an exit fee may apply when the investment is sold, usually around 2%–3%.
3. StockCrowd IN:
   • Platform Fee: StockCrowd IN charges a platform fee that generally ranges between 3% and 5% of the capital raised.
   • Success Fee: In addition, a success fee may be charged upon completion of the project, typically ranging from 5% to 10% of the profits generated.
4. Brickstarter:
   • Investment Fee: Brickstarter may charge an initial investment fee, usually around 2%.
   • Management Fee: An ongoing management fee may also apply, typically around 1% per year of the investment value.
   • Success Fee: Upon completion of the project, a success fee of approximately 10% of the profits earned may be charged. earned.
5. Strategy:
   • Platform Fee: Some platforms, such as Estrateguru, may charge a platform fee of approximately 3%–5% of the capital raised.
   • Management Fee: There may also be an ongoing management fee, generally around 1% per year.
   • Success Fee: As with other platforms, a success fee may be charged, typically ranging between 5% and 10% of the profits.

It is important to note that fees may vary depending on the nature of the project, the amount of capital raised, and the specific terms of each platform. Therefore, investors should carefully review the terms and conditions of any platform before making an investment.

How Can Blockchain Improve Real Estate Crowdfunding?

Technological advancements over the past decades have opened new opportunities for the global economy. In the real estate sector, these innovations have led to the emergence of tokenization systems based on blockchain technology. These systems enhance real estate crowdfunding by increasing transparency, efficiency, and accessibility—particularly for retail investors.

How Does Asset Tokenization Work?

Tokenization involves linking a “real” asset—such as a property—to a digital token that can be divided into fractions. Simply put, it is similar to issuing shares, but backed by tangible or intangible underlying assets.

These tokens are stored on the blockchain, a decentralized digital ledger. This ensures full traceability at all times, making it possible to verify when a token was created and who owns it. Once issued, tokens may be offered through a public sale process commonly referred to as a Security Token Offering (STO).

Advantages of Tokenization in Real Estate Crowdfunding

As mentioned, tokens can be linked to any asset—including real estate—allowing ownership to be effectively represented and transferred without physically subdividing the property. When applied within a real estate crowdfunding framework, this structure offers additional advantages.

• Improved Liquidity Levels. When an investment project performs successfully, tokenization can make the underlying assets more liquid. Tokens can be traded on secondary markets, making it easier for investors to exit their positions.
• Once recorded on the blockchain, a token cannot be deleted. Its traceability is robust, and its link to ownership cannot be altered. This makes real estate investment significantly more secure, allowing investors to verify ownership rights at any time.
• Information related to the asset, ownership, and its transaction history is available in real time at all times. This allows for continuous verification of regulatory compliance—an essential safeguard in markets where money laundering risks may exist. Additionally, when operating through platforms that utilize this system, such as Domoblock, investors have full access to all documentation associated with each transaction, ensuring transparency and accountability throughout the entire process.
• Elimination of intermediaries. Blockchain technology enables peer-to-peer transactions, removing the need for intermediaries in the purchase and sale of tokens. This streamlines processes and reduces associated costs.
• By dividing each asset into low-value tokens, Domoblock promotes portfolio diversification and enables broader investor participation.

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DOMOBLOCK is a pioneer in the tokenization of real estate assets.

Domoblock is the first Spanish company dedicated to real estate crowdfunding through the tokenization of house-flipping projects. Founded in 2021, this proptech company, focuses on acquiring underperforming or outdated real estate assets in prime locations. The strategy consists of renovating and repositioning these properties—often acquired at below-market prices—and bringing them back to market within an average of six months at a significantly higher value, whether for sale or rental.

To execute its renovation projects, the company fractionalizes the value of each real estate asset into digital tokens, making investment accessible to anyone, anywhere in the world. The minimum investment in Domoblock is €200.

Two types of projects are offered:

VALUE-ADD: Properties are acquired in prime locations (with high acquisition value), renovated to significantly enhance their appeal, and sold at a substantially higher price.

CORE PLUS: Properties are acquired in strategic areas with strong growth potential and high tourist appeal. After targeted renovations to increase value, they may be prepared for resale (including home staging), operated commercially, or rented to generate income.

In both cases, the properties are located in prime areas and are available to investors who typically seek annual returns above 10%. However, the second option generally carries a lower risk profile for investors.

So, if you’re looking for a simple, accessible, and profitable way to invest in real estate—and are drawn to the added value of blockchain technology and its many advantages— Domoblock is the real estate startup designed to help you get started. If you’re ready, you can begin your journey into the new era of real estate investing today.

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