Real estate crowdfunding is revolutionizing the way large property development projects are funded. With a plethora of investors and lenders, ranging from everyday investors to high-net-worth individuals and corporations, these projects get the capital they need with ease. In terms of buy-to-rent and buy-to-sell projects, crowdfunding can be used for a variety of functions such as land acquisition, unit renovation, facilities provision, and more.
Moreover, the amazing thing about real estate crowdfunding is that investors get their desired returns on their investment – either through dividends or in full after a successful deal closure. This model is leveling the playing field for traditional and non-traditional developers alike by providing them a platform to access funding from multiple sources at once.
Crowdfunding has revolutionized the investment and real estate industries in the past few years, providing easy access to resources to develop worthwhile projects. It allows a large number of individuals to collectively contribute to a single project or venture, making traditional forms of capital raising obsolete and even outdated. To facilitate this process, several Real Estate Crowdfunding (REC) platforms have been created to bring together property owners with potential investors.
Furthermore, there are two types of REC platforms available depending upon the investor’s preference – equity-based and lending-based investments. With equity-based platforms, contributors can get a share of revenue generated by the property when it gets rented out or sold off, whereas lending-based platforms allow users to loan out money to cover mortgage payments, with returns on regular interest intervals. Due to its many benefits and user convenience, crowdfunding is now a popular way for real estate financiers, entrepreneurs, and other business owners to raise capital from an ever-expanding pool of backers!
Knowing the average deal size of real estate crowdfunding projects is key when considering starting a business in the industry. This figure provides marketers with an invaluable tool that can be used to measure and analyze the market capacity accurately, making it easier for them to plan their business appropriately. The typical range raised by a real estate crowdfunding project starts from $500,000 up to $4M or more, though this typically represents a smaller share of the larger project value, which could be as large as tens of millions – from $1M up to $50M.
There are 2 leading ways to create a real estate crowdfunding platform. You either build your custom platform from scratch or use a ready-made standard solution.
While being an expensive option, custom development stands out and serves as a long-term opportunity. This statement is based on a plethora of benefits associated with it. For projects that consume longer periods and hence require specific features, custom development gives you an opportunity to build unique features, control the projects, and integrate easily with outside APIs. Creating custom UX tailored to target specific audiences ensures the specification for user experience and product quality.
A custom-built platform is one such possibility that can be expanded as per necessities. Custom development can be a fruitful solution for businesses looking for flexibility in terms of product design and direction, and it enhances their real estate crowdfunding platform needs.
SaaS can be a winning solution for businesses looking forward to launching a real estate crowdfunding platform while having a limited budget and timeframe. But bear in mind, Software as a Service is the type of service subscription provider. At the same time, its offerings include a ready-made software platform.
SaaS offerings allow businesses to test their ideas without encountering costly fees for development. Businesses acquiring SaaS for a real estate crowdfunding platform can build out their platform speedily and efficiently. The only downside of SaaS is it embraces limited features.
However, those who desire to enjoy additional features will demand the assistance of a skilled developer to build up the platform from scratch. Long story short, SaaS is an ideal pick for businesses wanting to quickly and affordably establish a real estate crowdfunding platform.
When it comes to real estate crowdfunding platforms, knowledge is power. Gaining insight into how real estate crowdfunding websites are successfully structured and what strategies they are utilizing to keep their business running smoothly is key in expediting your own progress.
EquityMultiple is changing the game for commercial real estate financing, providing unparalleled access to high-quality investment opportunities. With $131 million in assets under management and $1 billion in total deal value, it’s no wonder why this leading crowdfunding platform is making such big waves on the market. Accredited investors can choose from options such as preferred equity, syndicated debt, and common equity with terms from 6 months to 5 years at 6-12% annual returns. The minimum deal target is set at a low of $500,000, while the minimum investment amount is just $10,000. The platform has experienced steady 100% year-over-year growth since its inception.
Fundrise is a great platform for those interested in investing in commercial real estate who don’t happen to be accredited investors, with a $500 minimum investment and only requiring that you be 18 years old and a US resident (unfortunately, no international opportunities at this time), Fundrise gives everyone the ability to get involved with a variety of investments – from senior secured debt and mezzanine debt to preferred equity – all while focusing on projects with terms ranging from 1 to 3 years. Additionally, their passive investing concept means that you don’t have to sacrifice any of your free time trying to research potential investments, as all options are pre-vetted and tailored to fit your investment profile.
Shojin is a prime example of a real estate crowdfunding platform that has taken advantage of the burgeoning demand for such services and ultimately reaped the rewards. The platform was acquired by SmartLands, a security token issuance company, in 2019. This demonstrates that even small-scale businesses like Shojin can attract the attention of big players in the world of finance, an achievement that has likely helped to inspire other crowdfunding entrepreneurs.
It is an online marketplace for accredited investors. Using PeerStreet, accredited investors, and high-quality private real estate loans. This platform is advantageous in many ways and can be an ideal platform for real estate crowdfunding. Further, PeerStreet comes with a unique offering among real estate investment platforms and diversification across various parameters.
One of the most explicit examples of PeerStreet is low-interest rate risk, which is mainly because loans are a maximum of 36 months. While carrying these advantages, 2022 studies demonstrate Its total investor distributions exceeded $280 million; however, the average annual return was 6.49%.
The demand for crowdfunding platforms for real estate projects continues to grow. Against this background, it is obvious that the interest of investors will increase commensurate with the size of the niche. With the help of companies like Jatapp.co, you can develop your own crowdfunding platform and gain recognition. However, not everything depends on the developers, legal issues are also important, and the idea and the implementation is one of the parts of success, although an integral ones.
