"Innovative, fast, and open," that's how Kurt Praszl, CEO of RECrowd, describes RECrowd. RECrowd is an Austrian-based real estate crowdfunding platform. Kurt Praszl, CEO of RECrowd, sat down with us and gave us his insights into the Austrian market, real estate crowdfunding in general, and of course, details about RECrowd and the work they do. Read on to learn more about RECrowd, a partner platform of BrikkApp!
Tell us your view on real estate crowdfunding.
First of all, digital crowdfunding has almost no costs for investors to participate in real estate investing compared to traditional real estate. Of course, there are some risks, but you have the possibility to check, first of all, the platform and then the project. If you have questions, it's important for investors to ask the platform. A good platform will give you all the information you need. Once all your questions have been answered, it is easy to invest. In real estate crowdfunding, you can get very, very good interest and returns. It's digital, it's done in a few minutes, and the hardest part is just to wait for your money!
Tell us a bit about yourself and your background. What led you to RECrowd?
In my youth, I did an apprenticeship as a blacksmith and machinist. After this, I studied economics at the university, but I ultimately didn't finish. I worked for the Jewish community in Austria as well, especially for Vienna and I was responsible for the financial accounts and reports.
During this period I also worked with real estate. I was responsible for these tasks and this was my first taste of working with real estate. I became very interested in this. Afterward, I worked as a lecturer for the University of Applied Sciences for micro and macroeconomics. Around this time a friend of mine wanted me to join his real estate crowdfunding business.
So I accepted the offer and we started to raise financing together to begin RECrowd. Now we are here!
The RECrowd platform started in June 2020, during the Covid-19 pandemic. What was it like launching a company during this time?
It wasn't as hard as you might think, actually. For us, it was good in a way, because people had to stay at home and they got immediately bored because there wasn’t much to do, especially outside of work. The bad thing is that a lot of people lost their jobs and/or they did not have full-time work. But the people who were able to continue working and able to invest their money were good for us because we started as a platform immediately after the first lockdown. We were able to utilize some of this idle money.
Of course, it was high-risk for us because of competition with some other platforms - there are three Austrian well-known platforms. They had multiple years of advantage in the market and we did not. But we pressed ahead anyway because we researched the market very well. We have our own idea about this type of business to make our own mark. We are not happy with COVID of course, but we are happy that our business is working and prospering in this period of time.
We would be quite happier if COVID was over. It would be nice to meet all our business partners in real life and not over Zoom. So we're looking forward to the future.
Did COVID influence how the business grew?
It's quite hard to say because our experiences with the business were only during COVID, there was no RECrowd before it started. So the only experience we know is what we’ve encountered during COVID regarding projects and how to handle them. About the real estate business, it changed, and I'm sure it will continue to change dramatically in a few years because the density is different. We already have developers who want us to finance the entire project, as a senior loan. On top of mezzanine loans, there are many developers searching for funding. We expect this to continue.
But it's everywhere the same. You have to be fast and it is not easy to find the best projects. Post-COVID we expect there will be changes in the market - already you can see that inflation will be an issue moving forward.
What are RECrowd’s plans for 2022?
Our main goal in the coming time is to start our business in Germany and really get involved in that market. The next step is that we want to be the financial partner for project owners, for the whole range of finance. From there, our idea would be to expand from only crowdfunding to the possibility of buying and selling the entire real estate property. So RECrowd would be a one-stop-shop with different points where all the business partners can enter our company. I'm sure that the crowd investing parts will prosper and so on, but it will become a smaller part of our business.
One of the other priorities is that we want to prepare ourselves for complete digitalization. We don't want to send all the letters to the developers, deal with the piles of paperwork, and do things like traditional real estate has been done.
So we want to send and exchange data, and we want to bring this to a standard level to be faster, more digital. These will be our goals for the upcoming years.
What projects does RECrowd focus on?
It’s not enough to only offer projects from Vienna because there are several platforms that focus on developers only in Vienna. However, we know it's easier for investors to be interested when they see the project is in Vienna. We know that there are very interesting projects in the whole of Austria.
Investors have totally different possibilities to earn money. It's always the same structure but the projects in Vienna will be different in the near future. I think that we will focus on a broad approach in Germany and Switzerland. But, in Austria, we don't want to restrict our business to projects in Vienna. We want to be ready for several projects out of Vienna because we think they are very interesting, but it's not that easy because the investors' understanding is quite different.
Tell us a bit about the developers you work with.
There are some big developers, but our focus is on SMEs. These projects are not only in cities and they are very interesting for the investor because of the potential revenue and the interest that can be earned. In the cities, the projects will be less attractive due to the competitiveness of the offers, and we want to work right now with these kinds of projects outside of Vienna because we think they are more interesting for the future.
Before working with any developer, we make sure we have the possibility to check everything about them. This is necessary because we are talking about a loan. There are safety rules, but if the developer crashes the project, the money is lost. This is the reason why we are very very careful. We have to check, not double, but triple, to get all information from the developer. If the information is very good, we will start the project. We want to raise the quality, the quality of the developer, the quality of the projects. There will be a change in time, but we are young and we have the possibility to do it, but not in the dimension as we would like to have it.
In comparison with other platforms in Austria, how would you say that RECrowd differs?
It’s quite simple. We have some projects that we decided not to cooperate with, several developers. Afterward, we see these projects on other platforms. They have different rules. Our rules are strict. And this is our main point: work with investor money like it is your own money. We have to separate developers with higher risk and use those without a high-risk project on our platform. So ultimately the interest is not as high as possible for the investors, but we want to be a platform with no losses and no default.
Tell us a bit about the investors who use RECrowd. What is the typical user like?
We have the whole age range from 18 to, I guess, 88 or 90 but the main portion is between 25 and 45. Our investors are also approximately 60% men and 40% women, with women investing in fewer projects, but they invest more money in the ones that they do. So it results in both genders kind of equal with their volume invested. It’s very interesting.
The early adopters for the platform were investors who were familiar with this kind of business. We have more and more investors who started crowd-investing or they are as well on other platforms. So let's say maybe a quarter of people are familiar with ETFs and other financial products, but the majority just are crowd-investors on different platforms. This is for sure.
How much money do you need to start investing on your platform?
The minimum investment is 250 euros, but we will likely change it. We have not made a decision yet, but it will likely be around a hundred euros. It could be less. It could be less because with digital investments it's a possibility for everyone. We want to open the market as well for people who can start with only 25 euros per month. So during the year, it would be possible to make one or two investments. And why not? We want to give them the possibility. We don't want to keep them out with a red line minimum investment of 500 euros or a thousand. We want to bring more democracy to this market.
Some people start with lower money, lower amounts. They check on our platform, how the process goes. If they like it then they start to increase the amount they invest. Some start anywhere from 250 to 2,000 euros, or some start with a higher amount and go up to the online maximum limit, which in Austria is 5,000 euros. So it's basically a mixture of everything. So some start low and increase, some start with the higher amounts. It's very, very diverse.
Finally, if you had to describe RECrowd in 3 words only, what 3 words would you choose?
Innovative, fast, and open because we are open for every investor.