Three different things
Under the heading of alternative investing three products get mixed up. Real-estate crowdfunding lends to or invests in a specific project, a building or a development, through a platform. A non-listed real-estate fund pools money into a portfolio of properties managed by a fund company, such as the French SCPI or a Dutch or German open-ended property fund. Peer-to-peer lending funds consumer or small-business loans, one at a time or through automated portfolios, on a platform that may or may not be the lender. Each has a regulation, a liquidity profile and a way of failing that the others do not.
The crowdfunding regulation
Since November 2021 platforms that raise money for businesses and projects from the public, up to €5 million per project in twelve months, need a licence under the European Crowdfunding Service Providers Regulation, valid across the EU. A licensed platform must give you a key investment information sheet for each project, run a knowledge test and a loss-bearing simulation before it lets a non-sophisticated investor commit, and allow four days to withdraw after committing. It must hold minimum capital and have arrangements for winding down projects if it fails. Most real-estate crowdfunding platforms and business-lending platforms now operate under it.
What the regulation does not do: it does not vet the projects, it does not guarantee them, and it does not apply to loans to consumers. A platform that funds personal loans to individuals falls outside it and is regulated, if at all, by national rules or as an investment firm under MiFID when it packages loans into securities.
How returns are quoted
A platform quotes the interest rate the borrower pays, before defaults, before platform fees, before delays. The return you earn is that rate minus loans that are not repaid, minus fees, spread over the time your money was actually lent rather than sitting idle waiting for a project. On consumer P2P portfolios the gap between quoted and realised has historically been several percentage points, and in a downturn it widens. Ask the platform for its realised net return by year of investment; a licensed one under the crowdfunding regulation must publish default rates.
Liquidity
You cannot sell a loan to a developer the way you sell an ETF. Your money is committed until the project repays, typically one to three years, and late repayment is common in property. Some platforms run a secondary market where other investors may buy your position, at a discount when nobody wants it. Non-listed property funds may allow redemptions at set dates but can suspend them when many investors want out at once, which is precisely when you want out. Treat every one of these as money you will not see for years.
How they fail
The borrower fails: the project stalls, the company goes under, the consumer stops paying. Diversification across many loans limits the damage from one; it does not help when the whole sector turns, as property did when rates rose. The platform fails: a licensed crowdfunding platform must have a plan for servicing existing loans, but the practical experience of investors in platforms that collapsed has been slow and partial recovery. The valuation fails: a non-listed fund's units are priced by appraisal, not by a market, and appraisals lag reality in both directions.
Sizing
Confirm the platform's licence in the register of the national regulator or, for crowdfunding, in ESMA's register. Read the realised returns and default history. Assume the money is locked for the stated term plus a year. Then size the position as you would any illiquid, high-risk asset: a small share of a portfolio whose core is diversified, liquid funds, and never money you might need. The eight percent is real for some investors in some years. The protections that surround a bank deposit or a UCITS fund are not there, and the price of the eight percent is that you carry what they would have carried.
