Beyond due Diligence
Crowd investments from online platforms are among the fastest growing investment segments in Germany’s real estate industry. This new investment vehicle is taking root as a viable alternative to mutual funds. However, purchasing subordinate always harbours some risk. Just recently, the first developer of a project funded by crowd investment went into insolvency. It is for now unclear whether investors will receive a refund.
While online platforms can only act as brokers, as they are not legally permitted to assume the function of an investment advisor, it is crucial to convey trust in the products being offered. Therefore, developers must be carefully selected and vetted. I will attempt to shed light on some key steps suppliers of online crowd investment opportunities can take to minimize risk, while maintaining a high level of transparency towards clients.