Good practices in real estate crowdfunding

Every real estate crowdfunding site has a policy based on applicable laws, and on good practices (GxPs) that pertain to quality and ethical industry standards.

The idea of GxPs is to keep integrity intact as the business flourishes, and ensure that all stakeholders benefit as they should.

The core of GxP in real estate crowdfunding consists of the following:

  • Transparency in business
  • Traceability of transactions
  • Accountability of all parties
  • Satisfaction of direct and indirect stakeholders.

For online-platform administrators, the GxP can relate to the treatment of records in strict confidence (unless otherwise required by law), and the swift release of important publications and announcements, among others. For project operators, the GxP usually corresponds to full disclosure, especially of its financial position, as well as the proper and timely delivery of commitments. For investors, the GxP is more about honest declarations (as needed) and staying away from financial fraud and corrupt investment strategies.

Beyond these fundamental GxPs, real estate crowdfunding platforms have committed to other key concepts like corporate social responsibility, philanthropy, civic-mindedness, and community support. In other words, part of the profit made from transactions are made to benefit indirect stakeholders, such as the general public, marginalized segments of society, or others in need.

For the HBR portfolio, the added value involves the integration of environmental, social, and corporate governance (or ESG) factors into property investment. This means making a conscious effort to preserve the environment and see to the common good, while maintaining a win-win situation for all crowdfunding parties involved.

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