Propcrowd is a Spanish real estate investment crowdfunding platform that lets retail and institutional investors invest in real estate assets with high rates of return. These, in the past, were accessible only to very high net worth investors.
The Stock Market National Commission (CNMV)-accredited platform was started by the founders of HiGuests, a luxury property management company that manages the short-term rental of properties in Dubai, Barcelona, Mumbai, Dominican Republic and Australia through more than 20 portals. Dubai-based HiGuests was founded in October 2016 and has since generated over US$8m in revenue.
Propcrowd's CEO Miquel Manzanas spoke to CompassList at the 4YFN conference in Barcelona earlier this year.
This interview has been translated from Spanish and edited for length and clarity.
Q. What inspired you to create the company?
A. We saw a lot of money being made in the real estate market from our experience with another startup in the sector, namely, HiGuests, which was focused on tourist flats. Propcrowd aims to democratize access to real estate investments, allowing many more people to get this market’s returns by dividing the profits among all of them.
The company's raison d'être is investors do not need €400,000 or €1m to be able to buy a flat and refurbish it [for higher returns]. Our target audience is a person who has between €3,000 and €4,000 in the bank not generating any interest, and who wants to invest it.
We want to offer at least a 10% return. Sometimes we get more, but for us, any project that has a return of at least 10% is an interesting project.
What is your background?
I am an industrial engineer and I hold an MBA from ESADE. Most of my professional career has been focused on sales and business development. My entrepreneurial adventure started after moving to Dubai five years ago, where I met Oriol Plana, one of my friends from university, who is also an industrial engineer with an MBA from the University of Hull and an experienced business consulting professional. Together we launched Rentors [a Dubai-based crowd renting community] and HiGuests. In June 2018, we co-founded Propcrowd.
What were Propcrowd's most important milestones since it was founded?
When we returned to Spain in 2018, we came to know that a real estate agency, Fincas Forcadell, was already offering something similar to our [Propcrowd] idea for about six months. Called myFunding, it was an online crowdfunding platform created in collaboration with Stockcrowd IN. Considering our experience with HiGuests and the opportunities offered by Fincas Forcadell, we joined forces and Fincas Forcadell became our partner and investor in Propcrowd.
Fincas Forcadell also contributed to PropCrowd with the myFunding investors’ portfolio. Since then, Propcrowd has managed €1.5m, making four investments in Catalonia with an average return of 15% per year.
Propcrowd came to 4YFN [February 2019] and has been selected to be part of the Road to Silicon Valley acceleration program, organized by ACCIÓ (Generalitat de Catalunya).
What are the most important difficulties or challenges you have had?
From a corporate point of view, our biggest difficulty is to find good investment opportunities. In this sense, our partnership with Fincas Forcadell is an advantage, as it has access to far more immovable property, especially in Catalonia.
We also have the usual difficulties of any startup, dealing with everyday work issues.
What is your business model?
We charge a fee, of between 3% and 5%, when a project is financed and also 10% of the return on investment.
How does your business work?
To invest in real estate through the Propcrowd platform the only requirement is to access our website and register. As we are in a regulated sector, users must provide the data and documents requested by the CNMV.
The investment process is carried out through the Socilen participatory financing platform, accredited by the CNMV. While registering, the user selects the investment opportunity and transfers the money he or she wants to invest to a Socilen [a regulated financial institution] account through Propcrowd. Propcrowd releases the money only when 95% of the budget needed to carry out the business opportunity is available. The house or apartment is then purchased and we start the refurbishment. However, in the event that the necessary capital is not reached, Socilen returns the money without charging any commission.
When the refurbishment works are finished, the property is sold and the investment is returned together with the investor's share of the profits.
There are also other investment possibilities, namely, direct sale, direct rental or refurbishment to rent. If the investment opportunity selected is direct rental or refurbishment to rent, the investment returns will come from the rental income.
Do you have any organized system for the refurbishment and sale of real estate?
Yes, we have a team of two people who handle these matters. One is an architect and interior designer who is responsible for identifying the opportunities and project managing the refurbishment. The other is responsible for getting investors and is focused on marketing and operations.
We also work with the Fincas Forcadell network and the real estate agents of the Catalonia network.
What technologies do you use?
We have developed our own technology. At one end, we have opportunity identification and data analysis technology based on big data and an algorithm that we are systematically developing and perfecting.
There is also the Propcrowd platform that allows investors to register and keep track of where their money is, where they have invested and what they are earning.
How much money have you invested in the business?
We initially invested €200,000 [bootstrapping], and we are about to close a seed investment round of €600,000.
Could you tell us about your competitors? What differentiates you from them?
In Spain, we have a very big competitor called Housers. However, I would highlight our agreement with Fincas Forcadell, which allows us to have a great knowledge of the market and access to a very large number of buying and selling business opportunities.
The Spanish real estate investment market is still very immature. It is now estimated to be worth about €120m. To give you an idea, the real estate investment market in the United States is worth US$5bn.
What are your goals for Propcrowd in the short, medium and long term?
In the medium term, our goal is internationalization. We will probably open offices in Dubai, as we have very good connections and an investor in the Middle East. In addition, we need further technological development and teamwork improvements.
What is your opinion of the real estate investment sector for the future?
It has a lot of potential because it is still at an early stage. Also, as long as banks continue to offer low-interest rates for deposits, any product that is profitable for investors has a lot of potential.
