I haven’t written anything about my real estate crowdfunding portfolio since July. Enough changes happened in between, so I’m ready to provide new updates.
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Brickstarter is the place to go if you want to invest in Spanish vacation rental properties. This real estate crowdfunding platform buys tourist rental properties, renovates them and then sells them back at an increased value.
The minimum investment in each property is 50 EUR, and the average annual returns are around 9%.
By using big data analysis on rental websites like Airbnb, Booking.com or HomeAway, Brickstarter searches the best properties on the market. It looks for the best deals in terms of capacity for revenue, the potential for an increased valuation and acquisition price.
Once Brickstarter finds a property, it opens a funding campaign on the website. At this point, investors can invest from 50 EUR in the property.
After completing the funding phase and buying the property, Brickstarter starts renovating and decorating the property. This will make the property more attractive to tourists and increase its potential revenue.
Then, Brickstarter tries to sell the property. Meanwhile, it rents the property and investors earns rental income from it.
After the property is sold, Brickstarter distributes the capital gains to its investors.
So, nothing groundbreaking. Find a good property, get funds to buy it, increase its value by renovating it and then sell it back for a profit.
The best part for the investors is that they earn interest from the first day they invested in the property. Brickstarter pays a 5% interest to all investors while the property is in the funding stage.
After the property is rented, investors receive their rental dividends each 10th of each month.
Brickstarter is located in Valencia and started its operations in 2017. Since then, they funded 12 properties worth a bit over 2 million EUR. They already sold 3 properties and one more is currently in selling.
Combining the Linkedin profile and the platform’s website I gather this is the Brickstarter team:
Brickstarter doesn’t need any special license in Spain to function as a crowdfunding company.
The investor funds are kept in separate investor account by Lemonway (which is regulated and authorized by the Central Bank of Spain).
Each funded property is wrapped as a separate company with its own separate account. The legal form through which the investors are linked to this company is the following:
You can become a Brickstarter investor in 3 steps:
Only EU residents or Spanish companies can register on Brickstarter and invest in their properties.
You’ll need a copy of your ID to upload it on the website in order to validate your profile and be able to invest. The process only takes a few hours.
You can open your account using an email address or using your Facebook, Google or Linkedin account. I initially tried to use Linkedin, but unfortunately, it didn’t work.
You can fund your account either through credit/debit card (at no cost) or bank transfer. Your funds are kept separated from Brickstarter in an account created at Lemonway, the payment institution Brickstarter works with. (Lemonway is an accredited payment institution from France.)
In order to withdraw funds from your account, you’ll need to specify a bank account and provide a bank statement in order to prove the account is yours.
Pick one of the available projects and invest in it. The minimum investment in each project is 50 EUR. You can later track your investments on your dashboard page.
P2P lending platforms make money by taking a fee/commission from the borrower, the lender or both. Most of the p2p lending platforms I’m investing in don’t have any fees for its investors but from time to time I get some nasty surprises.
Some crowdlending platforms, like Neo Finance or Housers, automatically deduct taxes from the interest received. I don’t really like that since most of the European countries have a higher tax rate than my country’s, so I end up with lower returns.
For these reasons, I think it’s important to check what are the fees and how your income is taxed on each platform.
The average net returns on each property are around 9%. This being said, Brickstarter is fully transparent on how they make money and they make public their commissions structure.
Their fees on each property are structured like this:
If you’re a Spanish resident, Brickstarter will retain the taxes for you. Otherwise, you’ll need to calculate your own taxes and pay them in your country of residence. (this is good, as Spanish taxes are quite high, from 19% to 23%)
Investing in Brickstarter comes with many risks. Most of them are not specific to Brickstarter but are inherent to real estate crowdfunding in general.
Before investing in Brickstarter, you should take these into account.
Brickstarter is a rather new and small and untried platform. One of the main risks in this category is of platform default. To minimize the investors’ risks, the investments are kept separately from Brickstarter’s assets. In the case of platform default, the investors’ funds are protected.
One other risk involving the platform is due to the website’s security. The website doesn’t use 2-factor authentication, and this makes investors accounts more un-secure.
To mitigate this security risk, there is stuff investors can do as well:
Crowdfunding is a fairly unregulated domain in most of Europe. Any changes could affect existing platforms. This means Brickstarter might find it hard to comply with the regulation changes and at the worst, they’ll have to suspend their activity.
The entire real estate market could collapse, and your investments would become unsellable. We still remember 2008.
Some investments might have a lower value at the time of the sale due to the poor due diligence done by Brickstarter. It didn’t happen so far with the 3 properties sold by them, but the platform is young and has all the time in the world to make bad investments.
To mitigate this risk, you can do one of the followings:
Brickstarter plans to sell each property as soon as possible. Until this happens, your funds are locked. Brickstarter doesn’t provide any way for investors to sell their investment in advance. There is no secondary market available or any buyback policy.
The platform is relatively simple, and its main areas are:
The English version of the site is a mix of English and Spanish (look at the “Oportunidad Abierta” in the above image), with some poorly translated words like “Movements” instead of “Transaction history”. Besides these small details, I can’t really complain about it, as it’s actually pretty decent.
I love the number of details Brickstarter pours into the property details page:
I’m relatively new to Brickstarter as I’ve done my first investment in July. So far, I’ve only invested in one property from Seville.
I’ll do a follow-up to include these details:
Brickstarter is an interesting real estate crowdfunding platform. It’s the only platform I know that focuses only on vacation rental properties. Compared to the US, the short-rental properties sector in Europe still has a lot of space to grow.
The average returns of around 9% are relatively good, and I like that my returns are not taxed in Spain (with a 19% rate), as with Housers.
The 50 EUR minimum investment is a small barrier for entry. The option to pay by card is awesome. I get to fund my account instantly.
Brickstarter also has some big minuses:
If you found this review useful, you could also read my other reviews on similar real estate crowdfunding platforms: