Smart investment in the real estate market

Tourism sector, Real-estate market

Coronavirus and Brickstarter, what´s next?

Coronavirus and Brickstarter, what´s next?

19 March 2020


Sadly, Coronavirus is hitting Europe and forcing millions of people around the world to be in quarantine for the time being.

There´s uncertainty in the economy as we are seeing the stock markets and other alternative investments collapse (Bitcoin, Oil, Forex…).

What about Brickstarter and short-term rentals?

As you know, we´ve built our business model around our main goal: become the safest investment platform. This is why we are focused on real estate assets and mezzanine loans, where you have 2 sources of profit, rental yield and capital appreciation when the apartment is sold.

Let´s go one by one:

  1. Real estate assets: Real estate investment has always been a safe haven during times of financial stress. In this scenario of uncertainty, with close-to-zero interest rates, and not knowing the real impact of this crisis on the different industries, investors will probably focus again on real estate. We have the best product for them (apartments in the best city centers), with the highest yield.
  2. Mezzanine loans: Our investment opportunities are debt-free. This means that the opportunities don´t have any debt commitments and therefore are risk-free. The capital of your investment is secure, so the only risk is not achieving the forecast yield, but investors won´t lose their invested capital.
  3. Total yield = rental yield + capital yield. Your yield in the sum of the monthly interest you get from renting the apartment and the capital appreciation of the property when its sold. Although the rental yield from the rental will be lower than expected in the next few weeks, the impact of the total yield of the project will be low considering the higher demand on real estate assets.
  4. Brickstarter is focused on vacation rental properties as it has many benefits in comparation to traditional rentals: higher yields, prepaid model, insurance by the main platforms (Airbnb,…) and short-term rentals. It also means that the impact of the coronavirus is going to be limited in time. Defaults on traditional rentals are more difficult to deal, and we already know that this crisis is going to affect also traditional rentals.

So in the current scenario, of uncertainly and bearish markets caused by coronavirus, having invested in real estate with Brickstarter, is probably one of your safest investments.

Short-term rentals:

Unfortunately, short-term rentals are suffering this crisis like any other sector. Many bookings have been canceled in the short term (next 3-4 weeks), and the rental yield for at least March and April is compromised.

We are positive regarding the holiday season and hope to recover part of the missing bookings later this year, when the coronavirus crisis is over, as all important local holidays (like Fallas, Semana Santa) are being postponed, but right now we have to wait for further course of events.

It is still too soon to evaluate the total impact on the project final yield of Brickstarter, because as we can expect a lower rental yield in the very short term, we may get a higher yield from the selling the apartment, in the medium term. (The project business plan states that the apartment will be sold at the end of the 4th year of the project. Selling the apartment any sooner will result in a higher yield).

Brickstarter plan B

Brickstarter has been studying other verticals. In particular, we have several co-living opportunities on the table that we are studying with our partners.

Coliving assets are a great business and we are sure they are going to be part of the next real estate revolution the same way vacation rental properties did in the past.

Brickstater wants to help you invest in the best coliving opportunities out there, and we are working on becoming the 1st real estate crowdlending platform focused on coliving.

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