I love to diversify my real estate crowdfunding investments on as many great platforms as possible, which is why I constantly try out new platforms with my own money and then publish a review on this website.
In this article, I will review a real estate crowdfunding platform called Brickstarter. They focus on rental properties in Spain, meaning you get a monthly income distribution from those properties. But what I really like about this platform is that they focus on vacation rentals, meaning a higher yield for investors, but also less risk as all rental payments are collected beforehand. Because of all of those factors, that's a platform I really wanted to try out.
In the article, I will tell you what returns you can expect from the platform, what are the key features of the platform, and finally also share with you my latest results with the platform. Let's dive in!
Brickstarter is a real estate crowdfunding platform based in Valencia, Spain. The platform launched in 2017 and has already funded over 2 million worth of real estate projects in Spain.
As I mentioned earlier, what is really nice about Brickstarter is that you get monthly distributions of rental income from the property, plus some nice potential capital gain if the property gets sold.
However, where they take this a notch further is that they focus on vacation rentals, meaning properties that will be solely rented for short/medium term on websites like Airbnb or Booking.com. And this brings two great advantages for the investors: higher rental yields, and also less risk as the people renting those properties always need to pay beforehand, therefore eliminating the risk of someone staying in those properties without paying.
I also had the chance to meet with the CEO of Brickstarter, José María Pascual Muguerza, while I was staying in Valencia during the summer of 2019. Here is a picture of our meeting:
It was really nice to be able to chat directly with him about their platform and also about real estate crowdfunding in general. What was particularly nice is to see how they actually select platforms that they list on their site, which is completely based on big data & targeted at maximizing the revenues for investors.
As for all the platforms I review, I also got in touch with their support team, not only to check if they can help me out with one issue but also to make sure there is an actual business behind the website. I can say that they answered on the same day, and could solve my issue without any problems. I also checked their registration number in the Spanish company directory, and it matches the name and address that the company is displaying on the Brickstarter website.
Brickstarter doesn't advertise an average return for investors on the platform, but most properties listed on the platform have a net rental yield of around 5.5%, and an estimated gross capital gain of 15-20% in case the property is sold. That corresponds to approximately an 11% average return for a property held for 3 years. You also get payments at a 5% fixed rate until the project is funded, so that's nice as your money won't be sitting there in the case in case a project takes longer to get funded.
As I started to invest in the platform in August 2019, it is still way too early to calculate my own overall yield on the platform, but so far all payments have been made on time and with a yield close to what was expected (more about that at the end of the article).
As I mentioned earlier, Brickstarter focuses on vacation rentals, meaning that all rental payments are collected beforehand from platforms like Airbnb or Booking.com, which guarantees you'll never end up with tenants that are not paying their rent and staying in the apartments.
Brickstarter also uses mezzanine financing on their deals, which is a hybrid way of financing between debt and equity. In particular, it gives the lender the right to convert it into an equity interest in the company in case of default.
They also don't use any middleman to acquire and then manage the properties, everything is done in-house, which adds more control for them and therefore less risks for the investor.
After my meeting with the CEO of Brickstarter, I could also better understand how they are selecting the properties that they put on the platform. And I can say it was really impressive, as they use big data from all properties in Spain to find the ones that maximize the potential returns for investors while reducing the amount of risk.
You can also invest from just 50 Euros in each property, meaning that you can invest in several properties on the platform even with a low budget. And you should definitely do so, as with many properties in your portfolio your income will be smoothed out and your yield won't be affected if one or some properties are vacant.
So with all of those factors, it is definitely much safer to build a portfolio on a platform like Brickstarter than buying a single flat to rent it out to long-term tenants for example.
Starting to invest in Brickstarter is really simple: after opening the account (which takes less than 5 minutes), you can just make a bank transfer to the platform with the bank details they provide, but you can also deposit money via a credit card payment which was very convenient. I started with a deposit of 250 Euros that I made by credit card, and the money was there instantly.
As for all platforms, I also tried to withdraw money. Everything went fine on this side, and I had my money back within 2 days.
Then, to actually start building your rental properties portfolio you need to select one of them on the platform. You can browse current projects by clicking on the Properties tab:
After that, you can simply click on the project you want to know more about to get more details, for example, this project in Alicante:
For each project, you will have access to a detailed description of the property, what they plan to do in the future, and of course all the financial details of the project:
Finally, you can simply invest in the project by entering how much you want to invest and click on the Invest button. There is also a button on each of those pages that will give you an estimate of your potential combined returns (rental payments + capital gains) for the project.
Note that there is no auto-invest function available at the time I wrote this review, but they told me they are working on it and it should be added in the future.
Let's now dive more into the results that I got so far on Brickstarter. I opened my account in August with just 250 Euros to try out the platform, and immediately I invested in 2 properties, one in Sevilla and one in Cadiz. Since then, I put an additional 250 Euros in the platform and invested in another property in Cadiz.
In terms of returns, the combined expected yield for those investments is approximately 10.5%, which I will, of course, verify in the future as I got my first rental payments. In the meantime, I received the expected 5% return while the properties were being funded, so Brickstarter delivered as expected on this side.
I will of course update this section as I receive more returns from Brickstarter.
Overall, I can say that I like Brickstarter. I love the fact that they focus on vacation rentals, which is quite unique in the real estate crowdfunding and that provides both better returns and more safety for the investors. On top of that, I really like the fact that they use big data to maximize the potential returns for their investors. I will, of course, need to update this review as I get more results from the platforms, but so far I can definitely say that Brickstarter is a very promising platform that can have its place in any real estate crowdfunding portfolio.
Overall, I am really pleased with Brickstater. I really love the fact that they focus on vacation rentals, which mean better yields for the investor and also removes the risk of rent not being paid. You also get most of the advantages of owning an apartment yourself, like monthly rental payments and the possibility to get nice capital gains once a flat is sold. The platform is really easy to use as well, and I like the fact that you can deposit money by credit card payment. I also got very promising results from the platform and no issues at all so far. Therefore, I really recommend Brickstarter as part of any real estate crowdfunding or crowdlending portfolio.