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%.
- Launched: 2017
- Headquarters: Spain
- Investment types: Buy-and-sell vacation rental properties
- Return rates: ~9%
- Fees: no fees
- Minimum investment: 50 EUR
- Currency: EUR
- Who can register: EU residents
- Secondary market: no
- Auto-invest: no
How does Brickstarter work
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.
A more in-depth look at Brickstarter: who they are, track record, regulations
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:
- José María Pascual Muguerza – CEO and founder of Brickstarter, with around 17 years of experience in the finance sector
- Lorena Izquierdo – online and offline marketing and communication assistant
- Mario Olivares Latorre – Adviser for Brickstarter and CEO of Olivares Consultores, a real estate agency
- Carina Otero – COO, although her Linkedin profile states she’s a Group Supply Chain Manager at Orliman, a company manufacturing orthopaedic products. Maybe Brickstarter is just a part-time job? Or she just didn’t update her profile?
- Carlos Perez – Lawyer at Andersen Tax & Legal
- Carlos Lopez – CTO, can’t find anything about him
Regulations and how safe are my investments
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:
- The investors are lenders of this company
- The loan is a participative loan, through which the investors will obtain variable interest (based on rental income) and get a share of the capital gains when the property is sold
- In case of non-payment, the property is acquired by the investors
Becoming a Brickstarter Investor
You can become a Brickstarter investor in 3 steps:
1. Create your account
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.
2. Add funds to your account
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.
3. Invest in a project
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.
Brickstarter fees and taxes
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:
- 4% commission on property acquisition
- 4% commission on property sale
- 10% success fee on profit
- A management fee while the apartment is rented. Usually, 30% of the rent, to cover cleaning, guests attending, online presence, etc.
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:
- Try not to use the same password on 2 different websites
- Don’t use easy passwords like “123456” or “password”
- Don’t keep your passwords written on post-its
- Use a specialized password manager to keep track of your passwords
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:
- Don’t invest
- Diversify your portfolio by investing in multiple properties, so that one bad performance doesn’t affect you too much
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:
- A properties overview, containing the list of all properties funded through Brickstarter
- A property details page, with extensive details about the property, location, financials, market study and investor returns
- the user dashboard, with information on properties you invested in, invested capital, returns, transaction history and bank accounts
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:
- Forecasted investor returns
- Financials: expenses, expected profit on the sale, forecasted rental income, the degree of occupation in the past year, the performance of similar properties
- Investment case
- Apartment information, complete with photos, location pinpointed on Google Maps
- Market study of the area
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:
- How fast the properties are funded
- How much I earned during the funding stage
- Rental income
- How long it takes for a property to be sold
Conclusions on Brickstarter
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:
- relatively new and untried platform with only 12 properties in its portfolio and only 3 exits so far
- unregulated (like most crowdfunding platforms in the EU)
- no secondary market, although Brickstarter says it is working on it
- low number of projects, so it’s hard to diversify your portfolio
If you found this review useful, you could also read my other reviews on similar real estate crowdfunding platforms:
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