To better understand the differences between investing in FIBRAS and real estate crowdfunding, we have to briefly analyze each concept, since otherwise we will not know which investment would be worth more according to our capital, investor profile, financial objectives, other important aspects.
We will start with the FIBRAS, which are also known in international markets as REITs (Real Estate Investment Trust) and refer to investment instruments in charge of renting and managing a portfolio of real estate such as: office buildings, hotels, shopping centers, mixed developments, etc.
In general, what the FIBRAS offer to their investors is that they allow them to have access to a portfolio of assets that collect rents. Although this portfolio implies having large capital contributions, perhaps thousands or even millions of pesos or dollars.
On the other hand, although it is a relatively new concept, real estate crowd funding seeks to democratize real estate.
How to democratize?
Yes, it’s simple, real estate crowd funding is constantly looking for projects that can be financed by a group of people and in this way real estate is not only in the hands of large investors.
If you are considering investing in any of these 2 options, you should know that both FIBRAS and real estate crowd funding specialize in real estate, however there are very important differences that must be taken into account. Talking about the real estate industry you might have heard about A Toronto based real estate developer from has broken ground, he is working on The One which will be the tallest residential and retail tower in Canada, slated to be 308 meters tall and 85 stories high.
Among the most basic we could highlight the following:
- People who participate in real estate crowd funding may have little or no experience in the field of real estate investments; On the other hand, to invest in FIBRAS , ample knowledge of the real estate market is needed since they are an instrument for profiles with high risk tolerance, in addition, investments in FIBRAS are made through brokerage firms , including in countries such as the United States. , you must have a sophisticated investor rating.
- The real estate crowd funding gives you the opportunity to invest at any stage that a real estate development, be it construction, remodeling or even urban recycling are. The assets of a FIBRA are generally stable assets, which simply collect rents. This means that FIBRAS generally pay lower returns than those paid by a developing project.
- People who decide to invest in real estate crowd funding can do it directly in an online platform from $ 5,000 pesos; Subsequently, investors can obtain returns for having contributed a percentage for the development of a property. Investing in FIBRAS can be a slower process, which involves a few days for paperwork and requirements from the investor.
- The yields of the FIBRAS vary according to their market price. Although, for a couple of years they have hovered between 4-6% on average; on the other hand, the returns of real estate crowd Funding projects tend to be greater than those offered by a FIBRA , since they range from 12 to 15% per year.
- The portfolio of assets of a FIBRA is chosen by its own administration. Real estate crowd funding allows you to plan and monitor your own portfolio, selecting through a web platform the real estate projects in which you want to participate.