Real estate crowdfunding, also known as RECF, involves applying all tools that fall within the scope of crowdinvesting to the real estate sector. Therefore, real estate crowdfunding allows for brick and mortar investment through project financing or by becoming a member of the company that develops the project itself.
From this distinction, the three types of real estate crowdfunding come from:
- real estate equity crowdfunding (CONSOB standard)
- real estate debt crowdfunding (CONSOB standard)
- real estate lending crowdfunding
In the case of real estate equity crowdfunding, the Investor subscribes quotas of a company that carries out a specific real estate project, becoming a partner in all respects. At the end of the operation, if this is successfully concluded, then the Investor receives the invested capital plus a yield that depends upon the operation's outcome.
On the other hand, real estate debt crowdfunding configures a form of investment in which the Investor subscribes a debt security or a bond issued by a company to carry out a specific real estate project, thus becoming a creditor/bondholder. On the credit and/or bond due date, the Investor receives the invested capital raised by a pre-established interest rate.
For real estate lending crowdfunding (which is not among the CONSOB Regulation tools), the investor lends money by signing a standardized loan contract that is disbursed in favor of a company that realizes a specific real estate project. A credit right is acquired in exchange where, upon maturity, one receives their capital plus a fixed interest rate.
On the CONSOB-authorized Walliance portal, these two real estate equity crowdfunding and real estate debt crowdfunding models are applied.