Of a material or an enhancement of functionalities of a product that is incorporated into the crowdfunding campaign where you need to add an extra amount of money. The add-ons or "extras" are achieved by putting more money in case this need occurs.
The increase in wealth generated by a business activity in a given time. It is measured after taking the difference between the value of the production of goods and services and the purchase value of the external acquisitions, that is, between market prices and production costs.
Known as the acronym "AEFI" for its Spanish name, it is an association of companies and people with a common objective: to create a favorable environment for the development of FinTech and InsurTech companies in Spain. Part of the objectives of AEFI, whose president is Jesús Pérez, is to establish relationships with public, private, corporate, and other entities. BrickFunding has been part of the association since February 2017.
Its English translation is the Spanish Association of Fintech and Insurtech.
It is the action of amortizing a debt or an investment, that is, the process of distribution for the time of lasting value. However, it has different meanings. A repayment can be a gradual repayment of a loan, a recovery of the funds invested, or a loss of value of the goods or possessions due to the passage of time or to their attrition.
In Spanish, this action is called amortizar.
The estimated value of a property after retirement. Also called Fixed-Up Value.
In the United States, it is very common to refer to this acronym to define the objective value of a property purchased with the intention of an express reform, with basic repairs and cosmetic retouching to quickly resell it with a surplus value. This investment strategy is also called Fix & Flip.
Known as La Asociación Nacional de Establecimientos Financieros de Crédito (ASNEF), it is an organization that is responsible for reporting on the equity, solvency, and creditworthiness of Spain.
The English translation of the organization is the National Association of Financial Credit Institutions.
The BIC (Bank Identifier Code) is an alphanumeric code that serves to identify internationally and unequivocally a financial institution to which we are going to make a transfer. It consists of the entity code (4 first characters), followed by the country (2 characters), the location (2 characters), and optionally, the branch (last 3 characters).
In Spanish, it is called the Código de Identificación Bancaria.
A colloquial term used to refer to the investment in brick through crowdfunding or real estate crowdfunding.
Of course, it is also the name of our company,BrickFunding: your thematic finder specialized in crowdfunding real estate and that counts on the support of the most important platforms from all over the world. A global platform that searches investment opportunities that acts as a traffic channel to the main webs of the sector. A fast and efficient search engine that offers the best information for you to invest in those projects that best fit your criteria, helping you to optimize your investment portfolio.
A statement of business goals. It is built as a projection and early evaluation phase where future tasks are planned, risks are evaluated, problems are diagnosed, different points of view are provided, etc.
In essence, the information offered by platforms on their opportunities is still a business plan, i.e. a projection or expectations about the expected returns in the operation. This is something that investors must always take into account, and evaluate all the information of each investment reflected in the memorandum very carefully.
In Spanish, it is called a plan de negocio.
It is the cash flow, or the treasury, of a company. That is, the inflows and outflows of cash that occur in a given period. It is a fundamental parameter to measure the liquidity of a company and its financing needs, since a company can have cash problems, despite being profitable.
Applied to real estate crowdfunding, the cash receipts will come from the monthly rentals and the surplus value that is obtained by the revaluation of the property at the time of sale. The cash outflows will usually be the expenses of writing the property, the expenses of constitution of the instrumental society that will be the owner of the property (when this is the type of crowdfunding), the expenses of reforms and reestablishment of the property, the maintenance and management expenses, financial and mortgage expenses, etc.
The difference between these inflows and outflows of cash will be what will allow us to calculate the profitability of a project, or IRR. Normally, each platform offers a detailed financial plan with the forecast of expenses and income of each project. The investor should study this information in detail.
In Spanish, it is called the flujo de caja.
In Spanish, it is called La Comisión Nacional del Mercado de Valores (CNMV), but its English translation is the National Securities Market Commission. It is the body that supervises the Spanish stock markets, and is also the entity in charge of granting licenses like PFP, or Participative Financing Platforms.
It is important to remind investors that the granting of the license does not involve an individualized monitoring of the investment opportunities they offer.
This formula is used to invest in a business jointly without having to create a company to that effect and limiting the liability to the contribution made by each of the participants by signing the contract of participating accounts. It is a form of mercantile cooperation that allows an investor to participate in the business of a third party without entering to form part of its business, and without intervening in its management.
This is a private contract, in which the investor (account holder) contributes or delivers money to a third party (manager) for use in his economic activity or in the development of a determined project, with the account holder having the right to participate in the result of that activity or operation, whether losses or gains occur, under the agreed terms.
The accountant transfers the ownership of the assets to the manager and does not intervene at all in the business of the latter. It has only a right to credit against the end of the relationship (or periodically, depending on the duration of the contract), in view of the justification of the results that the manager is obliged to show. The losses borne by the parent company are, at most, the value of their contribution; but in case of profits, the benefits (and the return of the goods contributed in case of definitive extinction of the contract) will be those freely agreed upon in the contract.
This figure is regulated in the Code of Commerce of almost all countries, and its origin in the so-called medieval "participations". It is one of the oldest forms of business collaboration and was in disuse, but crowdfunding has returned to the topicality.
In Spanish, it is called a Contrato de Cuentas en Participación.
The name that is designated to thoseprivate equity real estate investments with a low risk/return ratio. The strategies that offer a profitability between 5% and 10% are usually considered as such.
This strategy usually invests in well-located, recently built, and high-occupancy tenants whose credit quality is high. The return on these investments is mainly obtained by recurring rental income and a low capital gain close to inflation.
The name that is designated to private equity real estate investments with a moderate risk/return ratio. It is usually considered as such to those strategies that offer a profitability between 10% and 15%.
This strategy is to invest in quality property that only needs a small reform for its rapid entry into the market.
The term is also called collective financing, however, crowdfunding is used more.
The etymology of the word comes from the conjunction of the English words "crowd" and "funding". This word surfaced to describe a new way of getting a project funded to appeal openly to a group, or multitude of investors, to contribute to those funds.
The idea of requesting funds publicly is not new, but the decisive factor for the exponential growth of this type of petitions, and it was necessary to invent a new word used for the internet. Because there is an immense number of people in a network who can get involved in a project, it ends up configuring an anonymous crowd that otherwise would be unthinkable.
Another factor determining crowdfunding is the anonymity, since that multitude of people who support the project are not known among them, and although it is usual that the platforms include buttons to share participation on social networks, it is most frequently anonymous.
But the most striking thing about the crowdfunding phenomenon is that it is most likely the microinvestors involved in a project do not know the person or company to which they are going to contribute funds. Their participation is based on the digital trust that has been gained through crowdfunding. In fact, the figures on the number of frauds or projects that collected the funds without delivering the product are very low.
Thus, based on this simple approach of collaborative economy, crowdfunding platforms have been developed with very varied approaches, and each one is specified in a specific sector or type of crowdfunding.
Depending on the purpose of the crowdfunding campaign and the benefits offered, there are different types of classifications. Also, depending on the web that we consult, we will see that there are those who establish more or less types of crowdfunding. In BrickFunding, we believe that the following classification is the most adjusted:
-General Crowdfunding (non-investment crowdfunding)
-Real Estate Crowdfunding (Brickfunding)
Crowdfunding is understood as the complete process of opening, financing, and closing a collective financing project. Basically, the campaign is the period in which fundraising is open.
In Spanish, it is called a campaña de crowdfunding.
Following the example of crowdfunding, the concept of crowdsourcing emerged a decade ago. The term is also a neologism of English origin, and comes from the words "crowd" and "outsourcing".
It establishes the idea of encouraging the development of tasks or projects by a community of people through an open call. That is to say, it is no longer the traditional idea of outsourcing to a company or a specific group of people for the development of a project; rather, it is about betting on the collaborative and participative possibilities offered by web 2.0 to carry out a task or solve a problem.
The control panel is the private part of the Crowdfunding Platforms where registered investors and those who have participated in a project or opportunity can control their evolution and keep track of their portfolio at a glance. It usually incorporates graphical visualization tools, configuration options, and customization, as well as a notification area.
It can also be called a user interface.
In Spanish, it is called a panel de control del inversor.
It is an investment strategy that is based on not investing everything in a single opportunity, but in dividing our investment into smaller ones, in order to minimize the risk exposure and try to maximize the joint profitability of our portfolio. In addition to dividing our portfolio into small investments, it is also advisable to diversify the type of opportunities in which we invest, trying to have different types of real estate, platforms, cities, residential areas, and types of crowdfunding.
Dow Jones Industrial Average. It is typical to refer to it as DJIA, Dow-30, or Dow Jones.
It was created by Charles Henry Dow, editor of The Wall Street Journal during the nineteenth century, and measures the evolution in the quotes of the 30 largest corporations un the United States stock market. Although it was born with industrial in its name, since many of the main companies were industrial back then, today it has a very important focus on financial and computer companies.
There are currently no Crowdfunding companies in the Dow Jones or the NASDAQ.
This is the most altruistic of crowdfunding types. There is no consideration and donors simply contribute their money to a solidarity cause or to a project they consider fair or with which they sympathize. Usually humanitarian, social, or political. The return it offers is emotional and is based on the satisfaction that the donor obtains for having supported a solidarity cause.
In Spanish, it is called crowdfunding de donación.
The legal status attributed in the Anglo-Saxon world to the person or institution that donates funds to a project.
In Castilian, it could be translated as "donante", although this term is usually used more to refer to the artistic patrons who paid for a work of art and whose image used to appear in the work in a pious attitude.
It refers to an investigation or audit of a company prior to the signing of a contract in which financial, legal, accounting, strategic, etc. aspects are evaluated. It may be a legal obligation, although the term is usually applied to voluntary procedures.
The first users of a product or a company. They are people who love being up-to-the-minute in innovative products and new technologies, and are often the most active users in innovative crowdfunding campaigns.
The term is used to designate the strategy to attract the first investors in a campaign. It is when you offer discounts or gifts only for those early birds. These type of offers usually fly in a few hours, and allow the promoters of the project to give more publicity to its launching, generating expectations among the users that are more eager to get the product. These types of users are often called early adopters.
Earnings Before Interest, Taxes, Depreciation, and Amortization
The English acronym EBITDA is usually used in Spanish. It represents the operating result of a company without taking into account the interests and taxes that the company has to pay, nor the amortization or depreciation of the fixed assets. It represents the gross profit calculated without taking financial expenses into account.
Unlike Operating Cash Flow, EBITDA, by not including financial costs, gives us a clearer picture of the operation of a company's business, although it also has the disadvantage that it does not include precisely those parameters that may be vital for the development of your business.
In the traditional real estate market, the term equity is used to refer to the difference between the market value of the property less the debt or mortgage that still weighs on the property. That is, it would be the net amount that would remain to the owner after selling the property and before expenses and taxes.
The most common meaning is that of funds provided by shareholders for the formation of a company or during a capital increase, which represents a share in the capital stock of the company. It is increasingly common to use this term to refer to the shares/stock of a company.
When you provide funds to a business project. It is usually made in exchange for shares of the company, although there are other models that do it with a contract of joint accounts that offer a commitment or contract in which it is agreed to participate in a business, but without entering the shareholder.
It is important to note that investors in this case become partners of the company and assume the same risks as the entrepreneur and therefore, although they may have greater profits, they can also have greater losses and even lose all of what is invested.
In this case, there is no commitment to return the money invested and we will only recover the investment if the shares are sold in the future, which is called Exit.
Since the presence of hundreds of shareholders, or even thousands, in the corporate structure of a small business can make decisions difficult, some platforms structure all investors in a company created for that purpose and whose only purpose is to be a shareholder of the company. Although there are many regulators who do not allow this figure and what is done is to syndicate all participants in a single representative with the right to vote. Thus, the company will have a shareholder and a single interlocutor, which will facilitate things in the face of future capital increases or negotiations at the shareholders' meetings.
In Spanish, it is called crowdfunding de inversión en acciones.
Of a material or an enhancement of functionalities of a product that is incorporated into the crowdfunding campaign where you need to add an extra amount of money. The add-ons or "extras" are achieved by putting more money in case this need occurs.
In a crowdfunding campaign, it refers to the minimum percentage of funding that needs to be obtained in order to carry out the same. Depending on the platform and the regulations of each country, a percentage of between 70% and 80% is established. If at the end of the campaign the percentage has not been reached, no funds are given to the applicant, and all the money is returned to the investors.
Only those campaigns that exceed this objective financing threshold are considered to have been successful and receive the funds raised less the commission of the platform for management.
In Spanish, this is called an umbral objetivo.
An instrument that converts or channels investment savings. From that moment, the buyer of the financial asset has the right to receive those revenues generated by the seller. In other words, a financial asset is a right over the issuer's actual assets and cash. Financial assets are all means through which economic activity is financed.
Real estate crowdfundingwould technically be classified as a financial asset since the buyer acquires the right to receive a future income from the seller. Although, an underlying real estate asset that resolves the investment should be considered private real estate capital.
In Spanish, it is called an activo financiero.
The term comes from the conjunction of the English terms "finance" and "technology". Fintech refers to all the startups and financial services companies that use the new technologies to offer innovative financial products and services.
Real estate crowdfunding would fall within this category, and also with Proptech and Wealthtech.
In crowdfunding campaigns, this expression shows the percentage of funding reached or committed to date. Usually, a progress bar is displayed in which we can graphically see this percentage.
The Spanish translation is financiado.
It is the financing objective that we set ourselves at the beginning of a campaign. Depending on the type of crowdfunding, it is necessary to reach that objective to 100% or to surpass at least one target threshold (usually between 70% and 80%), below which the campaign would close without success.
It is also known as an objective, target amount, and push goal.
In Spanish, this is called an importe objetivo.
It consists of the activity of attracting financial resources from individuals, companies, foundations, and Public Administrations for charitable or non-profit causes. Usually, the recipients of the funds are associations, NGOs, and foundations, although often they are political or religious organizations. The person fundraising is called afundraiser.
The concept is very similar to that of donation crowdfunding, although there are two basic differences:
-In crowdfunding, the donation becomes a concrete project while in fundraising, the donation is made to an organization without a definite purpose.
-In crowdfunding, fundraising is done online and is focused on private donors, while fundraising is done in person and is more focused on organizations, institutions, and large patrons.
Dealing with commitments from another person. From that moment on, that person is responsible for fulfilling a series of obligations. Basically, it is to answer for another.
Sometimes collateral can be used as a synonym.
In Spanish, it is called an aval.
Estimated Period of Permanence of the investment until its sale or divestment.
Some crowdfunding platforms limit the transfer of shares or stock during the life of the investment by contract so that the investor can not undo its participation until the end of said period of permanence, and the platform proceeds to the sale of the asset. Many others do allow their transmission, but in the absence of a secondary market, the most likely is that the investor can not resell his share unless he accepts a large discount.
Therefore, it is important that the investor takes into account this period of permanence since for practical purposes, he will not be able to sell his participation, and therefore he must consider his investment as illiquid during that whole period.
In Spanish, it is called periodo de permanencia.
The International Bank Account Number (IBAN) is used to identify an international bank account. It consists of a maximum of 34 alphanumeric characters. The first two are alphabetic and identify the country. The next two are control digits and constitute the validation element of the entire IBAN. The remaining ones are the account number, which, in most cases, also identifies the entity and the office.
In funds, assets, or rights. In each country, they are regulated by a specific legislation or regulations and are usually subject to approval by the securities and/or banking regulator in order to be able to operate.
There are three types of specialized real estate investment funds:
-Real Estate Funds
-Real Estate Investment Companies
Instituciones de Inversión Colectiva (ICC), otherwise known as Collective Investment Institutions in English.
Here it is no longer a question of supporting projects that we find interesting, nor of commissioning a product that we would like to advance the money for its manufacture or development. In this type of crowdfunding, as its name implies, it is about investing with the intention of earning money. In English, this appellation is generic and encompasses the three usual types of investment crowdfunding: Equity-based Crowdfunding, Lending-based Crowdfunding, and Real Estate Crowdfunding.
Unlike crowdfunding of donation or reward, the provides funds is not called a patron but an investor or micro-investor.
In Spanish, it is called crowdfunding de inversión.
A financial savings instrument that brings together a large number of people interested in investing their money and who constitute a Collective Investment Institution (or IIC in Spanish). Investors are called participants. The fund is managed by a management company, which is responsible for its management and administration. A depositary entity is the one that safeguards the securities and cash, and exerts functions of guarantee and vigilance before the instruments.
Depending on the purpose of each fund, people usually invest in listed securities (stocks, bonds, etc.), currencies, or real estate. In the latter case, they are called Real Estate Investment Funds, or Real Estate Funds.
The funds are regulated by regulations that set the limits on how the management company can invest the money, in order to ensure a minimum level of diversification, liquidity, and transparency.
Both the type of assets in which it invests (investment policy) and the rest of the characteristics of the fund (commissions, possibility of withdrawing the money, risk assumed, time horizon, etc.) are included in a document called an information brochure and in the summary of the Fundamental Data for the Investor.
Crowdfunding refers to those people who participate in investment crowdfunding projects , that is, they invest their money in a project for a profit or economic return. They are also called micro-investors and are the basis of the new participatory financial economy.
The Jump Start Our Business Startups Act, known as the JOBS Act, was approved in 2012 in the United States mainly to boost the development of its companies and startups by regulating investment crowdfunding as a means of financing.
Until the approval of the law, companies could only seek financing in three ways: self-financing (through their own and family savings, personal bank loans, or even their own mortgage), bank financing through a professional investor, or an investment group to provide sufficient funds. With the financial crisis, the tap of bank credit virtually closed down making it very difficult for small businesses and startups to get financing.
The JOBS Act allows small private investors to invest small amounts, but also without forcing the company listed to be publicly traded since previously if a company had more than 500 shareholders, the SEC forced the it to become public, but with the new regulation, this number increased to 1,000. In addition, only those that have contributed more than $10,000 are considered.
As a means of investor protection, it was established that investments only be made through crowdfunding platforms, which must be authorized by the SEC, and investment limits were also set for private individuals.
In Spain, a similar law was passed in 2015 called the Law for the Promotion of Business Financing, which regulates Participatory Financing Platforms (PFPs), or platforms of investment crowdfunding.
To denominate an alliance or union between two or more partners to invest or to develop a joint business. It could be considered Shared Risk, Commercial Alliance, or Consortium. The participants are called Venturers, or Partners.
There is no legal requirement for the structure of this agreement or temporary alliance. Therefore, it is not necessary to create a new mercantile society, although it is usually customary to create a new shareholding for both or be built in a UTE.
It is similar to the Contract of Participating Accounts, but unlike it, both parties do participate jointly in the development and management of the project.
Unlike early birdtickets, late bird tickets are offers or last minute promotions in crowdfunding campaigns. It is a common strategy to successfully complete or close a successful campaign because on all platforms, a feasibility threshold is established below which the applicant will receive nothing. Faced with the prospect of not getting any funds, many companies or applicants prefer to offer those discounts before they run out completely.
Also referred to as crowdlending, it is a type of investment crowdfunding in which the microinvestors lend their money in exchange for an interest rate. They can be loans to individuals or companies.
Depending on the platform, this type of interest is fixed per project, or each investor establishes a minimum rate below which they will not lend their money and it is the applicant of the loan that, depending on the available offer, chooses the lender with the best offer. Thus, in the latter case, the final rate paid by the applicant ends up being an average of all types, and for the same operation, an investor can receive different profitability than another.
In Spanish, it is called crowdfunding de préstamo.
Measures the possibility of being able to sell it quickly without having to lower its price in order to obtain it.
Investments in real estate crowdfundingare usually structured as an investment in the shares of a newly created liability company, and each investment must be maintained for a period up to 5 years. Many Platforms include in their conditions the prohibition of sale to third parties, and although some do offer a secondary market where investors can offer their shares for sale to other members before the term of divestment is reached, there is no guarantee of finding a purchaser or to be able to sell it quickly unless a substantial loss of value is accepted. In the case of contracts of participation in account, the situation is similar and it is difficult to undo a position.
In general terms, the investor should consider their gross investment.
It is a ratio used in the real estate promotion that compares the cost of the construction of the project (land, building materials, labor, professional fees, permits, etc.) to the amount financed by a loan. It is expressed in percentage LTC% and gives us a measure of the financial needs of the operation and necessary leverage.
Unlike loan-to-cost, this parameter compares the debt ratio not to the cost of the promotion, but to its expected sales value. It is expressed in percentage LTV% and gives us a measure of the benefit of the financial leverage of the operation.
The LTV% and LTC% are common parameters in real estate crowdfunding of loans and the lenders must consider, in addition to the location of the property, the experience and reputation of both the builder and the developer, as well as their credit history. The term "leverage ratio" is often used.
Very small loans intended for borrowers with low resources and who do not usually demand personal guarantees. Also, when no interest is required for their return, they are considered donation crowdfunding. Otherwise known as a micro-loan.
In Spanish, they are called microcréditos.
Minimum amount that can be invested in an opportunity.
In investment crowdfunding, it is the minimum amount that each platform establishes to invest in an opportunity or project. It is often referred to simply as a ticket.
This value usually oscillates between €50 and €50,000, and is fixed by each platform depending on the type of investor to whom your project is run.
In Spanish, it is called a ticket mínimo.
National Association of Securities Dealers Automated Quotation.
Electronic and automated stock exchange, oriented to companies of high technology in electronics, computer science, telecommunications, or biotechnology. Its most representative index is the Nasdaq-100 that collects the quotations of the hundred main companies.
Although there are already some crowdfunding companies specialized in investing in the Nasdaq, at the moment, no crowdfunding company is listed in this technology market.
Net profitability tells the investor the estimated earnings from your investment after deducting project fees and expenses. Only net projected benefits (rent and sale, less the costs of the work or reform of the building, the expenses of management and development of the project, municipal taxes, deeds and finally, it is important to also include the commission of the platform), which are divided between the invested capital. The result is expressed in percentage, and gives the investor a clear idea of the expected profitability.
The only drawback of this parameter is that by not taking into account the investment time, a project, for example, lasting a month apparently offers a profitability much less than another to five years that will show a much greater value. To avoid this inconvenience and to be able to compare investments with different time horizons, it is recommended to annualize this parameter and obtain the annualized net profit, or IRR.
It is important to note that in all the opportunities shown on crowdfunding platforms, these returns are objective returns, or projected returns, and are always estimates. The investor must always take this into account and also consult all the information obtained by each platform as it sometimes differs the calculation of the net profit from one to another, since not all include their commissions or expenses.
Net Operating Income.
Annual Net Income. In real estate, it refers to the sum of income from rent, as well as any additional income generated by the property, less operating expenses (maintenance, management fees, insurance and municipal fees). The payment of the mortgage is not considered in the calculation of the NOI, meaning the principal and interest payments are not included.
Not the be confused with the Net Cash Flow of that same investment, that would take into account the payments derived from the mortgage, since they do affect cash flow. That is, the money that effectively enters and leaves our current account during the life of an investment.
It is the measure of the cash flow generated by a company in the development of its business activity. Unlike EBITDA, all the actual inflows and outflows of cash, regardless of their source.
With this parameter, we can know if a company will generate enough positive cash flow and can maintain its operations and growth by itself, or if, on the other hand, it will need financing to be able to operate.
In Spanish, it is called Cash Flow Operativo - CFO.
The name private equity real estate investments are designated as with a high risk/return ratio. It is usually considered as such to those strategies that offer a return of 20% onwards.
In Spanish, it is called an oportunista, however, the Anglo-Saxon term is more commonly used.
This strategy bets on properties that require a very high degree of improvements or drastic changes in its structure and management. They also invest directly in promotions of new buildings and floors.
The term P2P is an English acronym that refers to the expression "Peer to Peer" and is in widespread use in Castilian as well. It is used to refer to computer networks where there are not a few computers that run servers and many others as clients, but all function as peers. This type of network was popularized a few years ago with the use of programs such as eMule.
The same horizontal concept could be applied to crowdfunding, where there are no longer many who ask for funds and a few grant them, but all people in the network can participate in small projects either by providing or requesting funds. In particular, this expression has been popularized to refer to loans of small amounts of money between individuals or crowdlending.
It is the name with which are designated in Spain to those platforms of crowdfunding that need authorization of the national stock regulator, the CNMV, and that are regulated under law 5/2015 of Promotion of the Financing Business, and that regulates the crowdfunding in Spain. It is the equivalent of the American JOBS Act.
Basically, the law distinguishes between general crowdfunding(which does not require authorization), and investment crowdfunding, in which platforms that engage in this type of crowdfunding does need authorization to operate in the Spanish market and must be constituted under this legal formula, and include in its denomination the term PFP, or Participative Financing Platform.
Currently, the law is under review by the CNMV precisely because of the particularities of real estate crowdfunding, since the law did not contemplate the option that a platform could be both promoter and other intermediary occasions, giving the paradox in Spain that some platforms did need authorization to operate and others did not, depending on the formula that they chose to structure their activity.
Historically, a patron has been defined as the person who sponsors or protects artists, writers, intellectuals, and scientists so that they can develop their work. That's why the people who support these types of projects on donation or reward crowdfunding platforms are called patrons as well. Patrons are the basis of crowdfunding and are also called micro-patrons, or sponsors. Also, it is very habitual to find its denomination in English as backers or funders. When it comes to investment crowdfunding, they are called investors, or micro-investors.
In Spanish, they are called mecenas.
This term is used to refer to the committed funds that a campaign carries. It is very common to say that a campaign has raised a large amount, but in fact, the funds are blocked in the account of the investors or patrons, and are not disbursed until the campaign ends successfully, or at least the feasibility threshold is reached.
In the case of real estate crowdfunding, the funds are also blocked in an account and therefore are committed to the investment. Only when the feasibility threshold is reached is the collection charged to the account to undertake the investment in the property.
In Spanish, this term can be the same as its English translation, or can be translated as fondos comprometidos, recaudados, or financiados.
Often referred to as pre-order crowdfunding, many consider it to be part of reward-based crowdfunding. However, it is becoming more frequent to find it as a category of its own given its different approach, since the goal is not to finance a project, but a product.
It is important to point out that it is not a question of investing in the company or project of the entrepreneur, but of advancing the funds to create a product that does not yet exist and that we will receive in exchange for our money. Somehow, this is a pre-sale campaign in which we can reserve a product, with the only reservation that it does not yet exist. Of course there is also an emotional component and support for those causes, projects, or products with which we empathize. But in many cases, it is a sale and purchase in which we paid a price that seems fair. Normally, the applicant establishes a minimum number of units to be developed and establishes a sales price.
In Spanish, this is called crowdfunding de preventa.
Assets that consist of a capital investment or debt with underlying real estate.
In Spanish, it is called capital de inversión inmobiliario.
Traditionally, these types of investments had been structured through collective investment companies such as real estate funds or SOCIMIs, since there was no other alternative to participate in the real estate market without having to face the high individual outlay that implies acquiring property.
Thanks to real estate crowdfunding, an investor can also invest in assets with an underlying real estate, but controlling the type of assets more. In funds and companies, the investor can not choose the type of real estate in which it is invested, and simply joins an investment project in which a professional manager buys, rents, and sells the asset without the investor intervening. In crowdfunding, it is the investor who must choose the type of real estate, allowing them to configure a portfolio according to their interests.
Regardless of the investment structure we adopt, these types of assets are classified according to their investment strategy and their risk/return ration in:
Generally in crowdfunding, it is a person who demands funds for his project through a crowdfunding campaign.
In real estate, it is the company that will promote the work and that is the one that requests the funds and will be in charge of managing the entire project. However, in real estate crowdfunding, it is usually called a sponsor.
In Spanish, it is called a promotor.
The term comes from the conjunction of the English words "property" and "technology". It refers to all the startups and companies that apply the new technologies to the real estate market.
Among the many fields we include are the new shared hosting portals, BIM (Building Information Modeling), architectural software, virtual reality, new real estate online platforms, home automation, and IOT application. These bring things to housing, buildings, and ultimately to cities, thus generating a Big Data with which to try to get our cities to be Smart Cities, etc.
And, of course, real estate crowdfunding. In this case, in addition to being a fundamental part of Proptech, it is also considered to be within Fintech, and the so-called Wealthtech for its characteristics as a product for financial investment.
Goods that cannot be moved. It can be considered a synonym of property.
The soil on which a promotion or development will be built, as well as the structures and constructions that are built on that soil.
Real estate crowdfunding invests exclusively in assets or obligations with an underlying property.
In Spanish, it is called bienes raíces.
Otherwise known as Property Assets.
By extension, property assets are those assets that have their basis in a property.
Technically, real estate crowdfunding would not be a real estate asset since the investor does not physically own the property, but has a right or obligation on it, and therefore should be considered rather as a financial assetor as private real estate capital.
In Spanish, a property asset is called an activo inmobiliario.
Real estate crowdfunding is a tool for financing real estate projects that, based on the crowdfunding method, allows any user to invest in a market that has been exclusive to large estates. Thus, this system of collective financing is presented as a breath of fresh air within the brick market and allows to launch projects without involving a bank and without the need for a large investment.
In Spanish, it is called crowdfunding inmobilario.
Real Estate Investment Funds are a type of investment fund that only invests in real estate. Due to the best tax advantages offered by SOCIMIs, this figure is tending to disappear and the funds are being transformed into SOCIMIs. In Spain, for example, currently there are only three real estate funds registered with the CNMV and all three are in liquidation.
These are Instituciones de Inversión Colectiva (IIC), otherwise known as Collective Investment Institutions in English, of a non-financial nature and whose main purpose is to invest in real estate of an urban nature for leasing. They are regulated and must comply with a series of requirements both in their capital and structure as in the type of real estate they invest and in the distribution of dividends.
In Spanish, it is called a Sociedad de Inversión Inmobiliaria.
Real Estate Investment Trust.
It is a type of investment company that was born in the United States to allow small investors to be grouped and thus, be able to invest in real estate on a large scale.
Many countries have adapted this figure to their legislation because of the great dynamism it brings to the real estate market. Almost all European countries have this figure. Spain adapted it in 2009 by naming it SOCIMI, and in South America, Mexico, Brazil, and Colombia have also adopted it.
In the Anglo-Saxon market, there are already many crowdfunding platforms that have expanded their portfolio, offering this type of product to their customers as well.
In this type of crowdfunding, in exchange for financing a project, a reward is offered that is usually a product, service, or experience. The greater the amount contributed by the donor, the greater the reward. Normally included here are artistic projects in which the reward is more of a testimonial or gratitude by the artist to the patrons to help finance a project. In these types of cases, they would practically be considered donation crowdfunding since the donor knows that he will practically not receive anything in return and the donor's main motivation is to help carry out a project with which they sympathize.
From here, the rewards can go up to sometimes reach values equivalent to what is contributed either for the emotional value you have for the interested party (a dedicated book, a VIP for a concert or an evening with your favorite artist) or by the future possibility of revaluation of the objects delivered (a signed photograph or a limited edition of an engraving that may become objects of worship for collectors).
In Spanish, it is called crowdfunding de recompensa.
Shares are securities issued by a company that represent the value or the shares in which its shared capital is divided. If a person owns a share, it is also understood that they own part of the capital of a company. They are also called stock, and is frequently referred to as a participation or action, like equity.
In equity-based crowdfunding, the investors go to a capital increase to acquire new shares issues. In stock-based real estate crowdfunding, what the investor acquires is not a percentage of property, but a percentage of the shares of a corporation constituted for that purpose and who owns the property.
In Spanish, they are called acciones.
In Spanish, the acronym consists of the words "Sociedades Anónimas Cotizadas de Inversión en el Mercado Inmobiliario" but its English translation is "Listed Companies of Investment in the Real Estate Market". They are the equivalent of REIT. They are regulated by law 121/12 and have a series of legal requirements, such as:
-Minimum capital of 5 million euros.
-Distribute at least 80% of the rents in dividends.
-To be listed on the Stock Exchange, either in Continuous Market or Alternative Market.
-Have a free float minimum of 2 million euros or 25% of its capital.
In addition, they have a series of physical advantages that make them attractive to structure under this formula. Although a private investor can acquire shares of these companies and participate in their profits, their liquidity is difficult to guarantee and sometimes their valuation is more linked to the evolution of the stock market than to the real estate. The management of companies is professionalized and the investor does not participate in the decision-making on the assets to be acquired.
Real estate crowdfunding has certain conceptual similarities with these type of structures, since both assetes are considered private equity real estate, although evidently to a lot smaller scale. In crowdfunding asset management, it is also professionalized and it is the platform that handles everything, but here there is a single asset per transaction, so that the investor can configure his own portfolio, deciding to participate only in those properties that are of your interest. Liquidity may be considered non-existent during the period of permanence, although after that time the liquidation and sale of the asset itself is linked exclusively to the real estate market.
It is a trustworthy business and it is habitual in Latin America, especially in Colombia.
The constituent of the fiducia provides goods to be administered by a fiduciary society according to the purpose that the constituent has established in the contract, and in favor of a beneficiary (who may or may not be the constituent). The property does not become the property of the fiduciary society or the beneficiary, but is an autonomous property that guarantees the obligation established in the trust agreement.
Under this formula, Rodrigo Niño, CEO of Prodigy Network, managed to gather 3,500 investors to raise money for a skyscraper in Bogota in 2009 that can be considered as the first real estate crowdfunding project in history.
In the Spanish legal system, there are no references to this institution, nor is it a habitual figure, and all references are doctrinal/jurisprudential, which define it as: "the patrimonial attribution that the trustor makes in favor of another to use the thing or acquired right for the purpose that both agreed, with the obligation to transmit them to the trustor or even third party, when the intended purpose if fulfilled." That is to say, on the one hand, there is a contract for the transmission of the domain, effective egra omnes (to all), and on the other hand, a valid binding between signers, intended to oblige the trustee to act so that the assets can be rescued when the agreed agreement is fulfilled.
In Spanish, it is called a fiducia.
Names with which those investments are designated private equity real estate, with a medium-high risk/return ratio. It is usually considered as such to those strategies that offer a profitability between 15% and 20%.
Although it is increasingly common to use this term in Spanish, the translation is valor añadido.
This strategy requires buying a property and adding value, improving it in some way: complete reforms, change of tenants, change of use, change of management model, etc. Once the necessary time has elapsed to provide this value, it proceeds to be sold in a timely manner, generating a capital gain.