Benefits of Crowdfunding for Real Estate Developers in Europe.

Aug 26, 2017
1 min read

Traditional funding for developers can be costly, time consuming and limited to lending institutions such as banks or hedge funds. These lenders impose tight restrictions on borrowers, such as strict scrutiny of plans and tight deadlines to adhere to. Once they are able to access the funds, there are expensive transaction, legal and administration fees as well as time consuming paper work and regulations to follow.

Since the 2008 financial crisis these institutions have tightened their lending criteria, restricting this source of funding. Crowdfunding offers developers cheaper, faster and easier access to capital. A wider audience of investors allows developers to easily raise financing for projects.

The internet gives investors access to their investments 24 hours a day with everything happening live. Equitybased crowdfunding opportunities take on average 8.2 weeks from the investment first being launched on the platform to completion, and loan-based crowdfunding takes just 4.8 weeks on average. Some platforms even boast funding projects in under a day!

The cost of raising money through a platform can also be significantly lower. The typical crowdfunding platform charges an initial fee for listing the project and possible administration fees to conduct their own due diligence. As platforms already have an established investor base, there is less work spent on investor management which saves borrowers time and money.