Real Estate Crowdfunding vs REITs
The importance of personal finance is nothing new, but it’s only been recent that modern technology has caught up to our needs. Directly investing in real estate has its own perks, to be sure, like the potential of significant earnings and possible tax breaks should the property lose value.
Realistically, however, direct investments like this have a very high barrier to entry, are more prone to fluctuation, require a significant amount of maintenance and monitoring, etc.
That’s why back in 1960, US President Dwight D. Eisenhower signed Public Law 86–779, which allowed for the investment of resources into real estate in the form of income-producing diversified portfolios, much in the same way one would invest in other asset classes. This meant that investments made in real estate could now be treated like liquid securities — a significant upgrade and a brand new opportunity.
This is what’s known as a real estate investment trust (REIT), and it has since been adopted by dozens of other countries.
Europe, in particular, has been seeing increasing adoption. In Italy, they’re known as SIIQ (Società di Investimento Immobiliare Quotate), in Spain as SOCIMI (Sociedad Cotizada de Inversión en el Mercado Inmobiliario), in France as SIIC (Sociétés d’Investissement Immobilier Cotées, and more.
On November 10th, 2020, the Regulation on European Crowdfunding Service Providers (ECSP) came into force, making RECs significantly easier to implement and use and adhering to a universal standard across EU member states.
This standardized and approachable way to invest in real estate is just one of the many benefits that REC platforms like BrikkApp offer over traditional REITs, but there’s more that might not be immediately apparent.
