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Thread: Real estate crowd funding

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    Властелин Medved's Avatar
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    Real estate crowd funding

    Hi, there! Here in Russia there is such thing like share construction or participatory constructon. It's when ordinary people pre-pay money for the flats that don't even physically exist at the moment, at the stage of projecting. A building company announces such a project on TV and Internet, people come to the offices of the company, choose a flat according to the project, study documentation and sign contracts. They pay money and in a few years they get their apartments built and that's it.
    There are a few regulatory constraints and laws issued by the government, which controls this real estate sector so theoretically it's safe.
    Is there anything like this in your country? How is it properly called? Do companies try to cheat?

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    Завсегдатай Antonio1986's Avatar
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    Medved the definition crowd funding is not correct.
    They just invest through a collective investment scheme (CIS) to an off-plan (i.e. not already built) property.
    In advanced countries is a common practice to raise money to build a luxury high-budget property.
    Even in Cyprus in order to build high-buildings we use this practice.
    Чем больше слов, тем меньше они стоят.

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    Властелин Medved's Avatar
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    Thanks. Are there any safety mechanisms protecting such investment scheme in Cyprus?
    Another month ends. All targets met. All systems working. All customers satisfied. All staff eagerly enthusiastic. All pigs fed and ready to fly.

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    Завсегдатай Antonio1986's Avatar
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    Quote Originally Posted by Medved View Post
    Thanks. Are there any safety mechanisms protecting such investment scheme in Cyprus?
    Except from the right to go the court in case the owner of the project does not honor the agreement you signed with him, no!
    The danger is obvious: not raise the adequate money to complete the building.
    In case you arlready gave money ... you should wait. Except if there is a specific schedule with specific deadlines.
    Чем больше слов, тем меньше они стоят.

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    Властелин Medved's Avatar
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    Okay, now if we turn back to Russia we can see that it's quite common that ordinary people buy off-plan buildings for living in the future, not just for investment or raising money. They often use various bank loans to pre-pay for their future apartments as co-investors. Then, as the danger goes, if the developer for some reason is unable to finish the building, the private investors become offended. They still have to repay the loan and still unable to get their housing. The Russian government has made an attempt to protect the rights of such private investors but still, the situation is not even close to normal.
    As far as I can suppose in Cyprus there is an option for 'investors' to pay in tranches, one sum at a time until the next deadline when the developer accordingly has to raise the building up to a specified stage. Then the next portion of money is paid and the development goes on and on until it comes to an end. Is that somr sort of Law/regulation/government protection obligatory for the developers, or is it just up to the developer, it may use this schedulr or not depending upon solely its good will?
    m I right with that? Are there similar situations abroad?
    Another month ends. All targets met. All systems working. All customers satisfied. All staff eagerly enthusiastic. All pigs fed and ready to fly.

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