Crowdfunding continues to be trending in both media and real estate circles. Of course, not all attempts at crowdfunding a real estate deal are successful. So how can investors improve their odds of getting projects fully funded?
There are many advantages to crowdfunding a real estate deal. A well-run campaign not only means being able to skip the hassles and delays of going to the bank for a mortgage, but you can also avoid the high rates and fees they sometimes charge. It can also be a way to create more buzz and do something even more amazing. Done correctly, crowdfunding can be a great opportunity.
Unfortunately, while crowdfunding real estate projects may appear to come easy for many, around 50% of campaigns actually get fully funded. This may not be surprising considering how easy it is to launch them, but most investors desire far better chances of winning than this.
Based on data from crowdfunding platforms like Kickstarter and Indiegogo, there are seven ways to improve your odds of running a successful campaign. They are as follows:
1. Start Early
While some real estate investors might have gotten lucky, it is always wise to test and get an early start. A smart strategy is to raise interest among connections and online affiliates. Ask questions about who and how many people may be interested in contributing before committing. Obviously, if these are zero responses, it may not be as successful as hoped. On the other hand, garnering a lot of responses is a good indication that crowdfunding is a viable option for you.
2. Direct Calls to Action
In the incredibly noisy, insanely busy society we live in today, it can be difficult to drive action for even the best projects. Others may feel that their donation is not really needed. So avoid being too passive. Be willing to make direct calls to action via email, direct messages on Twitter, in person and even picking up the phone.
3. Multiple Team Members
Indiegogo has acknowledged that crowdfunding campaigns with multiple team members usually perform best.
4. Staged Funding
Just as many homes today are listed low in order to spark bidding wars, breaking funding needs into stages can fuel the same type of results. For example; try breaking a deal into smaller, more manageable parts. People are much more likely to become contributors if they believe they will be part of something successful. If the goal appears too huge, it may discourage potential backers.
5. Frequent Updates
Indiegogo also states that those campaigners which post regular updates can gain significantly more traction.
Leveraging the media is easier than ever for real estate investors today, and this is certainly one of those occasions that it should be used. Getting coverage in the news and from bloggers can dramatically boost awareness and the number of visitors to your project’s page.
Browsing other projects on the most popular crowdfunding sites shows that most campaigns feature a video to quickly explain their project, add emotion and propel action. This isn’t mandatory, but can certainly make a difference.