How to Crowd Fund Your Real Estate Deal?
Gone are the days when you needed vast sums of money to get started in the real estate market.
Today’s investment world has a smart answer to the money problem: Crowdfunding!
Crowdfunding is a relatively new but exciting way for real estate investors to raise capital.
In Australia, it is slowly becoming an extremely viable option for new players to enter into the real estate market with just a fraction of the total investment needed to buy an asset.
What is it, and how does it work? Let’s get into the details.
What is Real Estate Crowdfunding?
Real estate crowdfunding works like all other crowdfunding projects. A pool of investors put their money together to fund the purchase of commercial or residential property or even a development project.
How the investors make money depends on the type of investment. Investors might make money through the rent generated by the property or by selling the property for a higher price.
Each investor gets their return based on the proportion of their investment in the property.
How to Crowdfund your real estate deal?
Luckily, crowdfunding capital for real estate (even for new investors) isn’t as hard as it might seem.
Try this simple strategy if you are looking to source investment capital for your first (or next) project:
- Find A Great Deal
The first step of crowdfunding a real estate deal always begins with finding a promising deal. How are you going to find a deal?
There are two ways. First, get to know a network of real estate brokers and investors who can hit you up whenever a good deal is on the table. Second, you can make use of technology and browse through real estate crowdfunding websites.
Several platforms let you participate in a real estate deal and buy whole or share in property projects. All web platforms have different minimum investments, from a few hundred dollars to thousands of dollars.
While most platforms would give you an idea of the returns, it’s still advisable to do some independent research.
- Analyse The D
deal
This is an essential skill that you’ll learn with time and months, and years of experience.
However, once you know how to analyse deals, you’d be better positioned to demonstrate the return flow to your potential investors.
Frankly, investors will only be interested if they get a decent monthly income or an overall decent return on the whole deal. So, make sure you know what you are getting your hands in before you go and pitch investors.
- Structure The Deal
Structuring a deal is important because it determines how well you get paid for your hard work and how much it benefits the deal’s investors.
In short, a perfect deal has the “win-win” ingredient and benefits you and the investors.
So, create a workable model that ensures all parties make money and complies with the legal aspects.
Moreover, structuring also means identifying the resources to run and manage the opportunity at hand. For example, a specific property might need some development before it can generate sustainable returns.
So, make sure you go through everything.
If the deal doesn’t fulfill all related criteria, go back to step 1 and find a good deal.
- Crowdfunding
Like analysing deals, raising capital for your deals is a demanding job.
(But, it does pay off well!)
Now there are several ways to get investors to crowdfund your deal.
- On a personal level, you can get in touch with friends and family for small-scale deals.
- Attend crowdfunding and investment events like seminars and conferences. Make new connections, meet people, and tell them how your deal can generate good returns for them. Who knows, you might strike a deal there!
- If you are a little tech-savvy, you can go for online crowdfunding platforms, where hundreds of accredited and non-accredited investors are always looking to channel their investment into real estate.
- You can go a level above and have your crowdfunding website created. A smart move would be making an email list of potential investors and regularly sending out deals.
Tips for getting better deals and investors
Whether you are making phone calls or sending emails to find about deals, or pitching in investors, you’ll need the perseverance to get started as a beginner in real estate investment.
This is where it helps to have some experience and a portfolio showcasing your expertise or the return that this project can offer investors.
So, try to gain some experience on smaller deals and then slowly work with experienced realtors and investors.
However, it all gets down to how much effort you put into getting yourself acquainted with the industry language and making new connections. Because more than just returns on a deal, investors judge you on your personality and how well you demonstrate your knowledge.
In that regard, it will be great to have a knack for sales, too, because it’s all about selling a good deal to the right investor.
Are you looking to Crowdfund a real estate deal?
If you are looking to crowdfund a real estate deal?
Book a FREE consultation session, and let’s get your real estate Crowdfunding journey started!
Here is to your investment success!
Dolly Brtan
Access free training @The Investment Fund Project Facebook group!
DISCLAIMER: – All written content on this site is for educational and information purposes only. Opinions expressed herein are solely those of the author, unless otherwise specifically cited. All statements reflect the author’s judgment as of the publication date and are subject to change. The information contained herein does not include personalized investment advice, nor should it be construed as investment, legal, or tax advice. All ideas and information provided should be discussed with a professional advisor, certified accountant, or practicing lawyer before implementation. The ideas and information presented here is also not an offer to buy or sell securities nor a solicitation of any offers to buy or sell the securities mentioned herein.