The crowdfunding of real estate in Mexico

Also known as Crowfunding, it represents an option to invest in real estate without the need for large assets.

 

The consolidation of the Internet as a means of community participation in issues related to obtaining funds has opened the possibility to new investment alternatives such as crowdfunding, or crowdfunding, which consists in the creation of a collective financing network through economic donations. or of another type, they manage to finance a certain project.

This investment model has different variants, some of which, the best known, offer rewards or accept donations to subsidize a particular goal, explained and spread by the same means of communication.

Other models of crowdfunding are actions and royalties: when you invest in a certain project or company and you expect to obtain a part, even symbolic, of the benefits. In the real estate market, this type of funding has become relevant. Its main objective is to find attractive investment projects, filter the best ones and present them to their users so they can decide which ones they want to invest in.

However, before investing in a real estate development through a real estate crowdfunding platform there are points that must be analyzed. First, make sure you are part of the AFICO. This is a grouping of collective funding platforms that sets quality standards in this industry, seeking to make the platforms transparent, both in the information they publish and in the way in which they operate.

It is also important to review in detail the information that the platform presents and not create high expectations for promises of guaranteed returns or exaggeratedly high rates. In this regard, Forbes Mexico magazine recommends paying attention to the following points:

1) The developer.

• That they be experienced professionals.
• The moral quality of the developer. Search for recommendations clients and suppliers of it. You could also check your credit bureau.

2) The development.

• Take care that the property does not have problems in the property title chain, and that the seller is the legitimate owner and is in a position to sell. Also, check the land use of said land, since it derives the size and type of project to be developed.
• That complies with all the regulations and that the developer has experience in the locality, as well as a network of contacts.
• Construction: Some efficient mechanisms include an analysis of cost sensitivities (see how a change in costs impacts the business), as well as lump sum contracts.
• Analyze your commercial viability. Here are factors such as the size of the units, the price of the same, the design and finishes. It is advisable to make an analysis of price sensitivity, to understand if the flow of sales at different prices is sufficient for the business to move forward.

 

Finally, it is important to say that the financing structure of a project is fundamental. It is what sets the level of risk, triggers the return and helps to align interests. A premise of real estate investments, is that to the extent that investments are backed by a property (real guarantee) will tend to be more secure. So it does not hurt to investigate if the project of your interest has this support.