BrikkApp – Czech search engine for real estate crowdfunding platforms

“Technically, it’s very similar to standard crowdfunding. By that I mean you have an online platform that connects to different users – project owners on one side and individual investors on the other.

“In real estate, this means that the project is a real estate investment opportunity. It can be a loan for a real estate developer or an equity investment in an existing property. “

BrikkApp is still a relatively new company, which you founded with your sister Jana. How did the idea to create it come about?

“Basically it happened a few years ago. We became really intrigued by the idea of ​​developing a real estate crowdfunding platform. However, upon further research, we discovered that there are already several crowdfunding platforms in Europe and that it is difficult to find reliable market information.

“In real estate, this means that the project is a real estate investment opportunity. It can be a loan for a real estate developer or an equity investment in an existing property. “

“We thought it might be more interesting to focus on the whole market and create a platform where the user can find all the necessary information on real estate opportunities, compare them and then invest. in several platforms via a dashboard. ”

You explained how the idea for BrikkApp came about and what you wanted to do, but let’s say someone has heard of real estate crowdfunding and wants to use your app. How would they do it?

“Right now our user can go to BrikkApp and search for information on the real estate crowdfunding market. We have a really interesting blog where they can gather relevant information. If they sign up, they also have access to reports on market developments through our dashboard and they can search for crowdfunding platforms using our ‘crowd scanner’. At the moment, we are also building comparison tools.

Jan Večerka, photo: Jan Večerka archive

“The next step we want to introduce, and in this regard we already have the technical solution, but we cannot do it legally yet, we want to introduce the option to invest through BrikkApp. For this we need a license and we are currently working on it, so that we can legally offer financial services. “

Is it possible to tell who is the typical user of real estate crowdfunding?

“I think that’s a big trend for the 25- to 40-year-old generation. There is a huge change when you compare them to their parents who, if they want to invest, will do so through their financial advisor and some sort of fund. Young investors tend to invest online. The Robinhood app is a prime example. This age group is also our target area for new users. “

What is the point of getting involved in real estate crowdfunding? Do you get an interest in a property and then a return, or how exactly does that aspect work?

“You don’t necessarily take a share of the property. It depends on what you are investing in. You may become a shareholder of the company that owns the building if it is an investment in shares.

“This is where we see our role: to help the user navigate the market.”

“However, our data suggests that most investment opportunities are in-depth instruments. This means that the developer is raising funds for new developments or renovations. [of property]. This is, I would say, the biggest part of the market. “

Does this mean that real estate crowdfunding has the potential to change the dynamics of very wealthy people, or business entities with control of developers, precisely by bringing a large group of people into the developer model?

“I would say so. If there is a normal real estate development project, 50 to 60 percent of it is financed by the bank and the rest (40 percent) must be financed from other sources. Fairness is the most valuable asset for every developer. They try various methods to increase their equity, which would allow them to work on more projects. In the past, the only way to achieve this was to finance it through investor loans from private investors.

“From now on, part of this equity can be financed by real estate crowdfunding. It’s a great tool for people to take advantage of investment opportunities that were previously only open to very wealthy people. “

We’ve talked about how real estate crowdfunding works and its benefits, but how big is the risk factor for an investor?

Jana Večerková, photo: Jana Večerková archive

“There is a risk, especially if you invest in something with a higher return. Usually the return on real estate crowdfunding opportunities is between 6% and 12% or even more, so you are investing in something where there is risk involved.

“On the other hand, the risk / reward ratio in real estate crowdfunding, from my point of view, is really excellent.”

Do you use crowdfunding in real estate yourself?

“Yes of course. The first time I came across a real estate crowdfunding platform was about five years ago. I really liked the idea of ​​going to a platform and clicking on the property in which you want to invest in. I really loved the idea and chose to invest in. I chose a UK platform and this was my first investment in this area.

On your website you say that for the market to really thrive, the market will need to become more transparent and that platform aggregators like BrikkApp can play a role in that. Can you tell me a bit more about how BrikkApp can help in this regard?

“Many platforms have started their activity and it turns out that their business model is not sustainable, so some of them go bankrupt. For a user, this environment can be confusing. If you have over 150 platforms around the world and are new to the market, it is difficult to decide where to invest. This is where we see our role: to help the user navigate the market more easily. “

If we move to the Czech Republic, a few days ago I was checking the Prague crowdfunding opportunities on your app and came across two providers. How big is the crowdfunding in real estate in Prague compared to other parts of Europe right now?

“There are states like the UK where billions of pounds have already been invested using this method.”

“It varies from country to country. There are states where real estate crowdfunding is very popular, but compared to the real estate market as a whole, it is still a niche market.

“However, there are states like the UK where billions of pounds have already been invested using this method. There are also countries, for example Poland, where it is not really possible to build a real estate crowdfunding platform due to the regulations. Poland has one or two platforms, but they’re not really very scalable I would say, they haven’t raised funds for a lot of projects.

“Here in the Czech Republic, crowdfunding in general is very popular. Real estate crowdfunding platforms have evolved here, but there are still few and their struggle right now is basically to educate the market, that this is another good way to invest their money.

How has the coronavirus pandemic impacted your work and the real estate market in general?

“The immediate impact in March 2020 was that the market stopped for a month or two. No one knew what the future would look like. Everyone thought that the economy was in decline, that there would be unemployment and therefore no one wanted to invest and that there would be no projects.

“After this gap of one or two months, people realized that despite the recession, there would still be new buildings, reconstructions and other projects, so, since the summer of 2020, the flow of new projects has returned. ”

Okay, but when it comes to real estate crowdfunding specifically, has there been a noticeable trend since the start of the coronavirus pandemic?

“[Crowdfunding] is a great tool for people to take advantage of investment opportunities that were previously only open to very wealthy people. “

That’s a very good question. I think we need more data for this. It is linked from market to market and closely linked to the specific foreclosure in each specific country. Our general view on this is that the market is doing well, despite examples of platforms having had to put some of their investment opportunities on hold.

“A good example of this is Spain, where many projects, such as tourist apartments, have been crowdfunded and are now not producing any cash flow. This means that these projects must be suspended or extended. Investors of course do not like this because it means that they do not receive their money within the period initially expected.

“In the UK over the summer, the Financial Conduct Authority changed its regulations on bonds and mini-bonds, forcing some platforms to close or suspend their activities. This does not mean that investors have lost their money. They can of course complete the opportunities that are offered on the platforms. However, they cannot take advantage of the new opportunities. “

Are there any advantages to being based in Prague?

“First of all, I really like living in Prague as a person, but I also really like the technical team that we have been able to build here and that we can find here also really competent technicians. In my opinion, this is the biggest advantage of starting a business in Prague.

“Plus, it’s also great that Prague has a good mix of foreigners living here as well. We’ve been able to put together an international team from the start and it’s great that we can find these kinds of people here in Prague.

Is there anything in your opinion that could help establish real estate crowdfunding as an attractive form of investment in the future?

“It has already happened thanks to the European Union. There is a new EU crowdfunding regulation which was adopted at the end of 2020 and which unifies the requirements for crowdfunding platforms across Europe.

“This is a very big push towards implementing the same crowdfunding mechanisms and related business registrations. This is a great opportunity for the development of the entire crowdfunding industry as a whole.

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About Clint Love

Clint Love

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