With crowdfunding’s growing rise in popularity, it’s no surprise you’re thinking of using this resource to fund your real estate project. In the end, no chance taken is without risk, but the many positive outcomes and success stories make it an adventure worth embarking on. Let’s get into it.
Contents
Key Takeaways
- Crowdfunding is a way to raise money through an online platform, where anyone can back an idea and watch it become reality.
- Platforms like Indiegogo and Kickstarter are popular crowdfunding websites.
- Services like LaunchBoom can help ensure the success of your crowdfunding campaign.
- Create a compelling and engaging campaign that falls in line with the personality traits and behavior of your target audience.
- Crowdfunding can be a great way to build a community around a project and get everyone excited.
What is Real Estate Crowdfunding?
So, what exactly is real estate crowdfunding? Basically, it’s a less traditional way to raise funds in order to bring a real estate project or idea to fruition. Instead of spending hours in line at the bank and betting on your house’s mortgage, crowdfunding allows potential backers to directly support and back projects that align with their values, beliefs, and dreams.
Believe it or not, crowdfunding has been around for much longer than the internet gives it credit for. In fact, the history of crowdfunding reaches back centuries. In the 1700s, Irish immigrants would pool their money together to fund community projects. In the same century, author Alexander Pope crowdfunded the publication of Homer’s Iliad by asking wealthy folks for subscriptions.
When it comes to crowdfunding in the world of real estate, it can be exciting for potential backers to find real estate ideas that they want to invest in that they wouldn’t have heard of otherwise. It’s almost contradictory: we’ve spent so many decades reducing homes, neighborhoods, and spaces to nothing more than financial assets to be traded around.
Crowdfunding gives the power back to the people: you, as an entrepreneur with a dazzling idea, and the backers, as active members of a community who want to be a part of something bigger.
Pros and Cons of Real Estate Crowdfunding
Crowdfunding can be an amazing way to raise funds for your real estate project – but it’s not without ups and downs. Nothing is perfect, so we’re going through some pros and cons you should keep in mind when considering running a crowdfunding campaign.
Pros
- Crowdfunding allows you to reach a broad range of potential backers who are already a part of a platform’s community and looking to back interesting and innovative new projects.
- Anyone can participate in crowdfunding, making it a community-oriented way to raise funds.
- Crowdfunding may help backers invest in properties they wouldn’t otherwise have access to.
- It allows backers to diversify their investment portfolio by spreading risk across projects.
- Crowdfunded real estate projects have the potential for high returns on investment.
Cons
- There is a risk of failure, but this risk is always present in every project.
- It may be difficult to keep up with regulations and you assume the risk of fraud or unethical behavior if you mess up.
- Crowdfunded real estate projects may not be easily tradable on the stock market.
- Some crowdfunding platforms may not allow this type of project to be funded on their platform.
- A real estate project might require ongoing funding as the project runs.
Benefits of Crowdfunding Real Estate Projects
Crowdfunding a real estate project can have many benefits. First off, there is massive accessibility to support. Instead of giving access to a select number of investors (which is the more common route), you’re opening up to a wider range of potential backers.
Crowdfunding also leads to flexibility, which can be of great value for backers. People are free to choose what projects they want to support, which can help diversify and expand horizons when it comes to an investment portfolio. This is also good news for you! Whether commercial properties, residential homes, or other spaces, you’re able to test what sort of project people are looking for. What is there a demand for that you can help to fill? You can connect with people who have unmet needs and ensure your project will be a success.
What to Know Before You Start Crowdfunding for Real Estate
Identifying the Real Estate Project
Before anything else, you want to make sure there is a need for your project. This is not an if you build it they will come scenario. First off, you need to do extensive research, analyze the market and trends, and have a solid foundation when it comes to the type of project that’s in demand and where it’s in demand.
Setting a Funding Goal
Before you begin crowdfunding, you need to know exactly how much money you need to raise. Be as realistic as possible – transparency will go a long way with people who are considering supporting you.
Creating Your Marketing Plan
One of the most important parts of crowdfunding is having a solid marketing strategy in place. While it’s wonderful that crowdfunding platforms give everyone and anyone the opportunity to bring their ideas to life, a project can easily be swallowed up in the sea of a million choices. Making sure you reach your target audience is essential, so polish up that marketing plan.
Tips for Creating the Perfect Real Estate Pitch
How to Write a Compelling Description
We’ve got some tips on how you can create a more impactful real estate pitch, and it all starts with writing a compelling description. It needs to be clear and concise, but it also needs heart and soul. You want to give potential backers a perfect understanding of your project, but don’t forget to give in a human element and keep it simple but deadly.
Why Create a Video Pitch?
A video pitch? Yes, of course. In this modern day and age, audiovisual content is the way to go. It can help immediately capture people’s attention and give a visual idea of what you want to do. Plus, videos are a great tool for storytelling. If your project has any specific goals or a story, highlighting this on video can help your campaign overall.
What Details Should You Provide About the Project?
You’ll want to give the people all the information they need to feel like they know the project just as well as you do. While it’s not necessary to blabber in technical jargon, the basic specifications and ideas of the project should be brought up. Most of all, make sure you’re clear about how much money you want to raise and how it will be used.
How to Highlight the Benefits of Investing in the Project
You want to focus on the positive: your project has so much potential and anyone would be lucky to be a part of this. Now that you believe it, you want to make others believe it too. Make sure you highlight what sets your project apart from the rest – what makes it so special? By focusing on these aspects, you’ll be able to convince people to get on your side.
Best Way to Get your Real Estate Project Funded (LB CTA)
There are many things you can do to set your crowdfunding campaign success in stone, and by making sure you think of everything and have a plan, you’ll do great. If you do want a little extra help building a community of supporters that’ll help make your project become a reality, you won’t want to miss LaunchBoom.
As a crowdfunding and Kickstarter marketing company, LaunchBoom can take you through every decision that will help make your campaign a booming success. With hundreds of happy entrepreneurs, many projects funded, and much more where that came from, LaunchBoom will be your bestie during crowdfunding times.
