Crowdfunding for real estate continues to heat up, but where do you start with launching a successful and effective campaign? More importantly, what should it look like?
Now that it’s clear crowdfunding isn’t going away, new real estate specific crowdfunding platforms have continued to develop. These platforms have made it easy for everyone to make sure they stay on the right side of regulation. Crowdfunding offers an amazing array of benefits for real estate. It makes fund raising ‘easy,’ boosts branding, increases odds of venture capital and institutional investment, garners more supporters and publicity, and can enable real estate investors to accomplish far more.
However, few real estate investors are experts in crowdfunding. It looks as if it can be incredibly easy (with the right plan). Yet, this perception can also be a trap. Watching an episode of Flip This House doesn’t automatically mean the first house you rush out to rehab and flip is going to be a wild success. Unless you have backed up your game with a good real estate investing education, you are pretty much on your own.
It is a wild misconception to assume that real estate investors can petition for some money and everything they need will come pouring in. This does appear to be happening out there, but those ‘overnight’ successes are often the pinnacle of a lot of research, thought, planning, strategy and great execution.
Put yourself in the shoes of the ‘crowd’ and those you plan to reach out to for support. Would you just throw thousands at a stranger’s campaign (among thousands) that simply asked for money to vaguely ‘invest in real estate?’ Highly unlikely.
An effective real estate crowdfunding campaign, or any campaign for that matter, needs a clear project, purpose and objective. In other words, what will be done with the money contributed? Will it be used to invest in a specific project and deliver a return? Will it improve a neighborhood? Improve lives? Create jobs? Deliver urgent help? Or will it just make the promoter rich?
Define the purpose, timelines, specific deliverables and allow the crowd something to feel passionate about.
If this all sounds too time consuming and distracting, there may be other options. By hiring an outsourced real estate freelancer or consultant with crowdfunding experience, someone else can help fill in all of the blanks and organize a campaign that will actually produce results. This can also help in other ways such as providing additional pools of prospective funders and getting other to promote for you. Indiegogo also poses that campaigns with multiple team members are 80% more likely to hit their goals. So put ego to the side and think about results.