How to do crowdfunding for real estate development in Dallas, Texas
Crowdfunding is a way in which real estate developers raise capital. It is a way investors raise capital by reaching out to a large pool of investors who contributes a little amount of money. Crowdfunding is different from the traditional way of raising money in that it is usually done online.
Real estate developers use their crowdfunding websites and social media platforms to reach out to more investors who are interested in investing.
Real estate developers have adopted crowdfunding as an alternative traditional means of raising funds for real estate projects. Crowdfunding is a better alternative to traditional bank loans as it entails very low-interest rates.
Benefits of Crowdfunding
Unless you’re as wealthy as Bill Gates or Warren Buffet, you will most likely need investors to be able to acquire the amount of money you need for a real estate deal. As a developer, you will most likely need investors who want to invest in order to be able to generate capital for a real estate investment.
A lot of developers and investors have chosen crowdfunding as an alternative way of raising funds needed for real estate projects.
There are several benefits of crowdfunding which include:
Crowdfunding increases your chances of raising money to fund your real estate investment
With crowdfunding, you have easy access to credits and capital without going through the stressful procedures of getting a loan. As an agent investor, you are able to keep your personal funds for other uses and keep your personal credit scores intact.
It helps you to secure funding for real estate projects when other traditional means of raising funds are not available or are limited.
Crowdfunding helps to grow your investor network
Through crowdfunding, you are able to reach out to a lot of investors across your state, country and all over the world. You get to communicate and make deals with a lot of investors and grow your investor network.
It helps to save time and money
Crowdfunding helps you save time and money as you only use an online platform to reach out to lots of investors who want to invest. It takes a little amount of money and time to create a crowdfunding website compared to when you seek for loans via traditional means. You can also make use of your personal social media platforms to reach out to investors who are willing to invest.
You gain access to lots of contributions and feedback from your online audiences.
Crowdfunding is a way to get feedback and contributions from the online audience about you and what you do. As an investor or developer, it is important that you pay attention to what investors are saying, their feedback and contributions.
From their feedback and contributions, you gain access to important information and knowledge on how to succeed in your fund sourcing campaign from potential investors.
It is also a marketing strategy to inform people about your business and what you do
Crowdfunding is a marketing tool to promote your brand. Apart from launching a fundraising campaign, it is also an opportunity for you to promote your brand and what you do. It is an avenue to sell yourself as a reliable and professional real estate developer/investor.
Crowdfunding Channels to source for funds
As a real estate investor who is looking for ways to expand and grow his/her portfolio, there are two crowdfunding investment channels to seek funds from willing investors. These are:
Equity investment gives investors an equity stake in the real estate property/investment. It effectively turns investors into shareholders. Equity investment is what most real estate investors are willing to invest in because it yields higher returns than debt investment.
Returns are based on rentals income of the property. Investors also earn a share of the appreciation value of the property in case the property is sold. Payouts are usually sent quarterly.
Debt investment means the investors are basically lenders to the developer/property owner. Each Investor receives a fixed amount based on the interest rate of the property mortgage loan as well as the amount invested. Payments are usually given every month or quarterly. Investors are given priority during property payouts.