Two of the characteristics of the Spanish property market were precrisis atomization and zero barriers to entry. After the tsunami very few survivors and entry barriers remain despite few are tougher. And among them are two, psychological and financial. The first carry them in his head these survivors after the”shock” experienced but is not the place to address them . Perhaps as a reflection come in handy if this phrase that appeals to the paradigm shift: ” They do not survive the strongest nor the most intelligent, but those who best adapt to change , ” Darwin said.
A change that inevitably came with the closing of bank credit tap. Today a promoter loan is a “rara avis” in the real estate sector. Therefore, only two ways to stay in business the traditional way. Or have own resources with large financial muscle to risk one ‘s own heritage, this is what they are doing new “players”in the sector with capital from foreign funds and as a manager says: “Now, if there is a mistake, it is with investment, not debt, and when you play your money do less crazy. “
Or else, you have to re-associate with a bank, despair and prepare to dance to their rhythm. A rate that is even remotely before, much less desired by the employer and therefore just took hold many viable operations. There’s no more. Or if?
How the crowdfunding can finance the real estate sector
However, if funding is not traditionally the first road to travel, real estate developer today can be financed and benefit benefiting thanks to crowdfunding .
The crowdfunding property stands as an emblematic way for a paradigm shift in real estate financing.Whether you are a survivor and if you want to go into business, this formula can be the key that unlocks the development of a project. Check out the blanket real estate loans here.
A developer needs three key assets to develop his project: a solar and / or building, capital and knowledge.The survivors retain some sun and have knowledge of the acquired business. One new will lack experience but has or should have solar. But surely the two they will lack the capital or much of it to carry out the business.
That said, we start from the basis that a property developer, whatever kind it is, has to participate starting with at least 25% of the total investment in a lump sum or in contribution (solar or building ). Only in this way you will recognize a real commitment to a project to investors future via crowdfunding wishing to enter the business.
This will be eligible for funding to develop a project. Everything always within the limits that the ActCrowdfunding is set at this time. However, if these limits are not exceeded through crowdfunding even the floor can be financed as has happened in Spain recently.
The current limits set by the law are to raise EUR 2 million and EUR 5 million for the case addressed only to accredited investors. Consider, for example: EUR 2 million represents 20% of an investment of EUR 10 million and / or 10% of EUR 20 million. If we turn to the accredited investor to reach EUR 5 million and following the same example, we see that account for 20% of EUR 25 million and / or 10% of EUR 50 million. This, as an example again, gives an idea of the percentage that can be obtained via crowdfunding .Everyone who calculated for the total investment that needs your project and will know if this option is viable.
Therefore, the interesting thing is precisely that percentage that helps us get the remaining funding to develop the project.
A capital structure including crowdfunding in financing for investment could be about this:
From the graph you can break off several readings. One of the most interesting is that if we turned up on a bench with pre – financing of up to 45% or 50% of a project they will be willing to talk, we can make them dance to the desired pace and almost safely, provided the project commercially viable, end up financing the rest. Remember that this contributes 20-30% that crowdfunding is that once covered them “without problems” and are now unwilling to do so, do not assume that risk. Hence the requirement to cover promoter based capital or pre – promotion, the best, or personal guarantees in the worst of them.
Another reading is tranquility to investors that the privileged debt is the mortgage on the project through the loan promoter will not represent more than 60% of LTV (loan to value).
The following graph shows the capital structure that would remain after the merger in a business project formed by the developer and investors via shown crowdfunding that can represent up to 50% of the financing needs of the project as a whole and in which delivers a promoter equity in proportion to thecapital contributed by each investor.
In the same way the benefits generated after completion of the project will be divided in proportion to the share that each investor has in the joint venture created to develop and finanlización is settled to the business.
This operation has been traditionally done in closed circuits, now thanks to technology offers the perfect tool to reach a large number of investors grouped in the company so that the promoter has a single interlocutor to negotiate the joint venture through platforms that league through your business.
Finally note that other financing options via crowdfunding already practice in other countries but not yet exploited in the Spanish property market is the crowdlending real estate as well as buying debt promoter ordebt crowdfunding.