Brickstarter, is it legit? We take a deep dive into this innovative real estate crowdfunding platform and answer all your questions to help you make an informed investment decision.
With all of the uncertainty surrounding global markets and economies around the world struggling to keep pace, we decided to not only review this answer but firstly answer the question: Brickstarter, is it legit?
Brickstarter Overview: What is Brickstarter?
Brickstarter is a young real estate crowdfunding platform that specializes in vacation and short-term rentals. Founded in 2017, the company has closed more than $3M in real estate deals in Spain.
Since its launch, Brickstarter has operated differently by using Big Data analysis and machine learning to pick properties that offer the highest returns to investors. It buys these tourist rental properties, renovates them, and puts them back on the market at a higher price.
The business model is pretty simple and uses the firepower of modern data analysis to get optimal returns.
As such, Brickstarter offers attractive returns to clients, the average annual return hovering around 9%
If you want to invest in the best real estate properties in Spain, Brickstarter is the place to go. Furthermore, the minimum investment is pretty low at just 50 Euros per property.
Here’s a glance at Brickstarter
Brickstarter at a glance
- Founding: 2017
- Headquarters: Spain
- An average rate of return: 9%
- Minimum Investment: 50 EUR
- Investments available: Buy-to-sell properties
- AutoInvest: Unavailable
- Secondary Market: None
- BuyBack Guarantee: None
- Projects funded: 3 million EUR
- Accepts investors from EEA countries, Switzerland
A team of professionals with in-depth industry knowledge and expertise heads the company. The CEO and founder, Jose Maria Pascual Muguerza, has over 17 years of experience in the finance sector.
Other team members have extensive real estate, legal, and marketing expertise.
Brickstarter Is it Legit?
Brickstarter has been in operation for more than two years now and funded more than $3M in real estate deals. It also has more than 1000+ active investors, which speaks to its health as an ongoing concern.
Therefore brickstarter is it legit? Coming down to the nuts and bolts, the company has an active customer service department that is always ready to address your questions and sort out problems promptly.
The company is duly registered, and the registration number in the Spanish company directory matches the name and address used on the website.
If you’re worried about your money, Brickstarter keeps investor funds in a separate account at a bank regulated by the Central Bank of Spain. Additionally, every project is treated as an independent company, and that limits the mixing of funds and unnecessary exposure of investor funds.
Is it Safe to Invest in Brickstarter?
As mentioned above, Brickstarter has taken bold steps to safeguard the safety of investor funds.
Their business model also adds another layer that further insulates the investor. For example:
Brickstarter only deals with vacation rentals where payments are made upfront, unlike in traditional rentals where rent is collected after.
The company uses mezzanine financing instead of debt. These deals give the lender an option to convert debt into equity in case of default, thereby eliminating pressure on the platform.
Brickstarter is it legit? For one, the company does most of the work in-house instead of relying on middle-men. The team searches and conducts all due diligence on properties which minimizes the risk
This young and innovative platform uses big data analysis to identify properties that maximize returns for investors.
Finally, with a minimum investment of just 50 EUR, investors can invest in different properties, further minimizing their risk.
How to Open an Account on Brickstarter
Opening an account on Brickstarter is a simple and straightforward process that takes less than five minutes.
You only need to fill out the registration form with your data and a valid email address. After that, you need to confirm your email address by clicking the link Brickstarter sends to your email.
How to Invest in Brickstarter
Once registered, you’re ready to start investing. You can fund your account in two ways.
- Bank Transfer – Using the bank details, Brickstarter provides to investors. Your balance should reflect in 48hrs
- Credit Card – It’s a fast, comfortable, and convenient way to fund your account. Your balance reflects almost instantly.
Once the money is reflected in your account, click on the properties tab on your account to view available investments.
For each property, Brickstarter provides in-depth information such as the expected internal rate of return (IRR), return on equity (ROE), net rent return, etc.
You’ll also see the funded and outstanding amounts and the number of investors in the project.
The dashboard view on projects also lists:
- Property information – A detailed look at the property including location, video and why it was selected as a potential investment, photos and location pinpointed on GoogleMaps
- Project summary – Listing pertinent details on the project
- Financial information – Breaking down the project’s numbers including acquisition prices, projected returns, degree of property occupation in the past year, the performance of similar properties
- Documentation and market study – Going deeper into the project details and relevant market research on the property area, including similar deals, amenities, facilities, popularity etc.
When satisfied with the analysis, fund the project by allocating your investment, starting from a minimum of 50 EUR per project.
Unlike other platforms, you earn a 5% APR on the amount invested until the project is fully funded. Therefore, you start making money from day one.
Types of Investments Available at Brickstarter
Brickstarter offers only one type of investment: Vacation and short term rentals in a buy-to-sell model. They pool investor resources together to purchase and renovate the property with an eye to selling. In the meantime, the property is rented out on a short-term basis, with rent proceeds being paid out to investors.
Investors, therefore, enjoy two types of income: Rental yield income and capital appreciation on the sale price of the renovated properties.
Brickstarter Auto Invest Tool
Unfortunately, Brickstarter doesn’t have an auto-invest tool. Investors have to research and invest in properties manually. On the other hand, the low number of active projects at any one point makes it easy to analyze and invest in properties.
How Much Can You Earn on Brickstarter?
While Brickstarter doesn’t list the average annual yields, you can compute the expected return based on the data provided.
The net rental yield on most properties on the platform is about 5.5%. The gross capital gain works out to about 15-20%, and your investment earns a fixed rate APR of 5% until the project is fully funded.
Taking the above into account, most investors tend to enjoy an average return of 11% for a property held for 3+ years.
Who Can Invest In Brickstarter?
Brickstarter is only open to EU residents and Spanish companies. Investors must be of legal age and have at least 50 EUR to invest.
You’ll need to upload a copy of your ID to the platform to validate your profile and start investing. The whole process only takes a few hours.
- High average yields with a focus on vacation and short-term rental properties
- Returns from monthly rent income
- Secured by real estate
- Suitable for beginners with an easy to use platform
- Opportunity to diversify into real estate and also spread risk across properties
- Low minimum investment of 50 EUR per project/property
- Young, vibrant, innovative and fast-growing real estate investment platform
- Lack of a secondary market
- No auto-investment function on the platform
- Lower yields compared to development loans.
- Brickstarter investments are currently limited to vacation and short-term rental properties in Spain.
- Brickstarter Fees and Taxes
Most P2P lending platforms make money by charging a small commission from the lender, borrower, or both parties. It’s, therefore, essential to check on the fees before you start investing.
Brickstarter structures fees as follows:
- 4% commission on property acquisition
- Another 4% commission on property sale
- 10% success fee on profits
- Management fees of about 30% of rent while the apartment is rented that covers cleaning, online presence, attending to guests, etc.
The platform retains taxes if you are a Spanish resident, while citizens from other countries need to calculate their taxes.
Brickstarter is it legit? Well, it’s a fascinating real estate crowdfunding platform that uses big data analysis on vacation properties from websites such as Airbnb, Booking.Com, HomeAway, among others, to determine properties that generate the best return for investors.
Compared to the vacation rentals in the US, Europe, Brickstarter’s primary focus market has a lot of potential.
The average return of 9% makes the platform attractive and competitive compared to other P2P platforms.
50 EUR is a small barrier to entry, making it for all investors to get on the real estate investment ladder.
Brickstastrer has also simplified the registration and investment process and works with a reputable and regulated financial institution to handle money.
On the downside:
Brickstarter is still a young platform with few property exits so far.
It operates in an unregulated environment like most other peer-to-peer lending platforms in Europe.
It lacks a secondary market, but the company says it’s working on it.
A low deal flow that makes it difficult to diversify your portfolio
So Brickstarter is it legit? By all accounts, yes. It’s an excellent platform for investors who want to diversify into the real estate industry or those just starting their P2P investment journey.
The platform’s ease-of-use, coupled with detailed project information, helps the investor make informed decisions.
Other Crowd Investing Resources
Looking for more options? You might want to read some of our other crowd investing and peer to peer lending reviews. There are many peer to peer lending and investing platforms currently available, and you can diversify your interest income by using several of them simultaneously.
You can consider some other peer to peer companies by checking out our Estate Guru review or our Mintos review. Also check our posts on the best peer 2 peer lending platforms in Europe, and the best real estate crowdfunding platforms in Europe.
Are you already investing in Brickstarter or in any other peer to peer lending platform? Leave your thoughts and questions about this Brickstarter review below.