Lending crowdfunding is an alternative form of financing between individuals
In the first 8 months of 2022, the real estate lending crowdfunding raised 56 million euros, up by 61% compared to 2021
In the world of real estate crowdfunding, the use of the lending mode is growing. The formula of investors who (for an interest rate) lend funds to finance the property’s renovation comes to sharply duplicate equity.
According to data from Crowdfunding Buzz, in the first eight months of 2022, with 202 real estate projects, the lending sector raised 56 million, up 61 percent from 2021, , when the figure was less than 35 million. In contrast, equity crowdfunding raised only 27.7 million in the same period, with 13 active campaigns, up slightly from 24.1 a year earlier
Source: Crowdfunding Buzz.
The numbers of real estate lending crowdfunding
At a time of economic uncertainty such as the current one and loss of purchasing power, real estate lending crowdfunding is thus positioned as a profitable and in-demand investment.
The average collection grew from 220,000 euros per transaction in 2021 to 278,000 in 2022. Concurrently, investors reached 35,000 this year compared to about 22,000 in August 2021.
One of the reasons for the success is the average gross rate of return on loans, which stands at about 10 percent year-on-year, combined with the average term of loans, just under 12 months.
What is real estate lending crowdfunding
Lending crowdfunding is an alternative form of financing between individuals, created to help companies and individuals obtain funding, which offers attractive income opportunities, but at higher risks. It is carried out through online platforms and aims at developing specific business projects. Not the least of these is the development of small towns.
Real estate lending crowdfunding and the regeneration of Italy’s small villages
There are just over 300 villages in Italy, with a population of about 6,000. They are certified by the Soprintendenza delle Belle Arti as architectural and natural heritage.
According to a Coldiretti analysis of Istat data, towns under 5,000 inhabitants in Italy are home to 16.5 percent of the national population but account for 54 percent of the Italian surface area. Some regions even cover up to 70 percent of their territory. The numbers change when considering small villages. Many of these villages have become famous in Italy and abroad. Still, there are also smaller places unknown to most that have embarked on a path of redevelopment and revitalization in recent years.
The example of Its Lending
In this context, real estate crowdfunding has been dedicated to the regeneration of Italy’s villages for some time now. Its Lending is the only Italian real estate lending crowdfunding platform for revitalizing these small towns.
The group’s business strategist, Fabio Allegreni, explained that the formula is achieving great results: “In less than a year since our inception (November 2021), we have financed 19 projects and repaid six loans, repaying a total of 265 thousand euros, plus accrued interest,” Allegreni commented, adding that among the advantages of lending crowdfunding real estate is precisely “the shorter average duration of the loans (seven months approximately), which allows a high rotation of invested capital, with an average roi of 5.8 percent on investments”
What are the characteristics of the funded and reimbursed projects?
“Repaid real estate projects are small and medium-sized structures for residential use (two- or three-room apartments). Two apartments are in Sicily, two in Tuscany, and two in Apulia. In the latter, we repaid most recently the loan for the intervention on a building in Caprarica di Lecce,” he concluded.
