Those that wanted to invest their money in real estate in the past were faced with numerous charges. No matter whether real estate funds, shares or condominiums: Charges were always deducted from the planned investment capital. This has now changed with real estate crowd investing.
One of the many advantages of real estate crowd investing is that investors are not burdened with any fees, contrary to all other forms of real estate investment. When buying an investment apartment a large portion of the capital goes to the authorities du to the land transfer tax. Depending on the Bundesland, it can be up to 6.5% of the purchase price. Often one also has to add brokerage fees, which depending on the Bundesland can amount to 7.14%. During the holding period, the investor must also pay ongoing administrative fees.
Fees even charged with indirect real estate investments
Just as with all shares, real estate stocks and REITs order fees need to be paid. With traditional banks, it will usually be 1% of the trading volume. For small orders, there is usually a minimum commission of 20 to 30 euros. The cheaper alternative are direct banks, but also they usually charge a certain fee. The custodian fees should also not be forgotten.
With open real estate funds there is a subscription fee of around 5%, which is normally due at the very beginning. The value of the shares must thus rise by at least 5%, for the investor not to lose any money on his investment. During the holding period and a management fee of 0.3% to 3% per year also applies. It covers the fund management, the technical implementation as well as the cost of annual reports, advertising and sales brochures. There is also the custodian bank fee, as the custodian must hold the assets and is responsible for the issue and redemption of shares. The total expense ratio of an average fund volume for real estate funds is usually 0.7%. Closed real estate funds incur even higher costs. The so called soft costs are about 8% to 11% and include fees, marketing costs, and premium or prospectus costs.
Invest 100% of your invested sum
So far there has been no way for investors to invest in real estate free of charge. With iFunded investors now have the opportunity to participate in attractive real estate, which they previously could not access, whilst saving money at the same time. 100% of the invested sum actually gets invested. The cost of sales over the crowd investing platform iFunded, are solely carried by the project developers. The market for real estate crowdfunding is growing steadily and is becoming more attractive for project developers and investors.