Real estate crowdfunding is revolutionizing the way large property development projects are funded. With a wide range of investors and lenders, from everyday investors to high-net-worth individuals and corporations, these projects get the capital they need with ease. In the context of buy-to-rent and buy-to-sell projects, crowdfunding can be used for a variety of tasks such as land acquisition, unit renovation, provision of facilities, and more.

Furthermore, the wonderful thing about real estate crowdfunding is that investors get the desired return on their investment – ​​either through dividends or after a successful deal closes. This model is leveling the playing field by providing a platform for traditional and non-traditional developers alike to access funding from multiple sources simultaneously.

Source: www.reicapitalgrowth.com

What is real estate crowdfunding?

Crowdfunding has revolutionized the investment and real estate industries over the past few years, providing easy access to resources to develop meaningful projects. It allows a large number of individuals to contribute collectively to a single project or venture, making traditional forms of capital raising obsolete and even out of date. To facilitate this process, several real estate crowdfunding (REC) platforms have been created to bring property owners together with potential investors.

Furthermore, there are two types of REC platforms available – equity-based and debt-based investments, depending on the investor’s preference. With equity-based platforms, contributors can receive a share of the revenue generated by the property when it is rented out or sold, while debt-based platforms allow users to cover mortgage payments with returns at regular interest intervals. Permits to lend money for. 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-growing pool of backers!

Average deal in real estate crowdfunding

Knowing the average deal size of real estate crowdfunding projects is important when considering starting a business in the industry. This data provides marketers with an invaluable tool that can be used to accurately measure and analyze market potential, making it easier for them to plan their business appropriately. The typical range raised by a real estate crowdfunding project starts from $500,000 to $4M or more, although this typically represents a small portion of larger project value, which can be as large as tens of millions – from $1M Up to $50M.

How to start a Real Estate Crowdfunding Platform?

There are 2 major ways to build a real estate crowdfunding platform. You either build your {custom} platform from scratch or use a ready-made standard solution.

{custom} development

Despite being an expensive option, {custom} development stands out and serves as a long-term opportunity. This statement is based on the many benefits associated with it. For projects that consume a long period of time and therefore require specific features, {custom} development gives you the opportunity to build unique features, control the projects, and integrate easily with external APIs. Creating {custom} UX to target specific audiences ensures specification for user experience and product quality.

A custom-built platform is one such possibility which can be extended as per the requirement. Custom development can be a useful solution for businesses looking for flexibility in terms of product design and direction, and this adds to their real estate crowdfunding platform needs.

Mother in law

SaaS can be a winning solution for businesses looking to launch a real estate crowdfunding platform with a limited budget and deadline. But keep in mind, Software as a Service is a type of service subscription provider. Plus, its offerings include a ready-made software platform.

SaaS offerings allow businesses to test their ideas without facing expensive fees for development. Businesses that acquire a SaaS for real estate crowdfunding platform can rapidly and efficiently build their platforms. The only downside of SaaS is that it adopts limited features.

However, those who wish to enjoy additional features would seek to build the platform from scratch with the assistance of a skilled developer. Long story short, a SaaS real estate crowdfunding platform is an ideal pick for businesses looking to quickly and affordably set up.

Examples of Real Estate Crowdfunding Platforms

When it comes to real estate crowdfunding platforms, knowledge is power. Gaining insight into how successful real estate crowdfunding websites are structured and what strategies they are using to keep their business running smoothly is key to expediting your own progress.

equitymultiple

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 huge waves in the market. Accredited investors can choose from options like preferred equity, syndicated debt and common equity with terms ranging from 6 months to 5 years at 6-12% annualized returns. The minimum deal target is set at a low of $500,000, while the minimum investment amount is only $10,000. The platform has experienced 100% year-on-year growth since its inception.

Source: appinventiv.com

fundraising

Fundrise is a great platform for anyone interested in investing in commercial real estate that is not an accredited investor with a minimum investment of $500 and only requires that you be 18 years old and a US resident (unfortunately, There is no international opportunity at this time), Fundrise gives everyone the ability to get involved in a variety of investments – from senior secured debt and mezzanine debt to preferred equity – all with a focus on projects with terms ranging from 1 to 3 years By focusing Additionally, their passive investing concept means that you do not need to sacrifice any of your free time researching potential investments, as all options are pre-screened and tailored to fit your investment profile. have been prepared.

shojin

Shojin is a prime example of a real estate crowdfunding platform that has taken advantage of the growing demand for such services and ultimately reaped the rewards. The platform was acquired by Smartlands, a security token issuance company, in 2019. It shows that even small-scale businesses like Shojin can attract the attention of bigger players in the world of finance, a feat that has helped inspire other crowdfunding entrepreneurs. ,

peerstreet

It is an online marketplace for accredited investors. Using PeerStreet, accredited investors and high quality private real estate loans. This platform is beneficial in many ways and can be an ideal platform for real estate crowdfunding. Furthermore, PeerStreet comes up with a unique offering among real estate investment platforms and diversification across various parameters.

One of the most obvious examples of PeerStreet’s low interest rate risk is mainly because the loans have a maximum term of 36 months. Taking these gains into account, 2022 studies suggest that its total investor distributions will exceed $280 million; However, the average annual return was 6.49%.

conclusion

The demand for crowdfunding platforms for real estate projects is on the rise. Against this backdrop, it is clear that investor interest 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 implementation is just one of the parts of success, although an integral one.