An enduring trend, real estate crowdfunding is credited with generating more than $1 billion worth of investment in recent years. With dozens of platforms cropping up across the web, experts anticipate a two-fold investment increase within the next year.
Thanks to the U.S. Securities and Exchange Commission (SEC), popular investment pools like realtyshares.com, realtymogul.com and realcrowd.com are now available to investors of all capacities — in years prior, only accredited investors valued at $1 million with a salary of at least $250,000 per year had the chance to join in.
However, despite the size of your wallet, it’s important to note that an estimated half of all real estate campaigns fail to meet their funding goal. To avoid that outcome, we encourage you to sift through our list of simple steps for success before leaping into a campaign of your own.
Right off the bat, understand that as a project sponsor, you’re responsible for eliciting interest from prospective buyers. You’ll need to establish a clear plan, purpose and objective.
Ask yourself the following questions:
- What am I going to do with this money?
- What type of return do I expect to receive from this investment?
- Will the project be beneficial to the community at-large?
- And finally, what makes this appealing to investors?
Once you’ve answered those questions, you can begin to form a solid plan for the project and establish your funding goal. This is crucial because many platforms on the market today don’t allow for the project sponsor to change the goal amount once it begins.
Be strategic when it comes to identifying your goal and remember, you’re trying to appeal to a large base of investors who may or may not have a lot of money to spend. Begin with a low amount and consider phasing the investment process down the road.
Also be aware that your own digital presence will make all the difference in reaching audiences online. Do you have a large social media following or a popular website? How are you going to convey this project and your brand online?
Before you launch, identify methods of gauging interest and attraction on the web, whether that be through outreach through use of a press release, email or on popular social media sites like Facebook, Twitter and Instagram.
Remember, a crowdfunding campaign can do numbers to your improve your brand online. If successful, you can start to build a solid reputation with investors. According to recent reports, real estate crowdfunding campaigns that met their goal are reported to have benefited from more venture capital after completion than those who failed to meet their original objective.
If that doesn’t spark your interest, just listed to the words of Fundrise cofounder Dan Miller:
“Like any business, particularly within the investment world, it has to be built over time as people see returns come through and developers feel like they are being treated well. It’s the kind of thing that takes a while to grow but it’s really starting to accelerate…”