{"id":131007,"date":"2020-10-20T10:00:40","date_gmt":"2020-10-20T16:00:40","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=131007"},"modified":"2024-02-19T13:49:19","modified_gmt":"2024-02-19T20:49:19","slug":"crowdfundingera-fairness-efficiency","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/crowdfundingera-fairness-efficiency","title":{"rendered":"Crowdfunding: A New Era of Fairness and Efficiency"},"content":{"rendered":"

The passage of the JOBS Act has helped transform the way that many firms raise money for real estate development. The act, first passed in 2012, allowed groups and individuals to pool funds together, a practice frequently referred to as crowdfunding. Since its initial passage nearly one decade ago, countless firms have been able to engage in larger projects, reduce firm-specific risk, and further diversify their portfolio.<\/p>\n

Large-scale real estate projects are no longer limited to just institutions and extremely wealthy individuals. In fact, with minimum investments as low as $10 in some cases, crowdfunding has helped make commercial real estate investing more dynamic and accessible than ever before.<\/p>\n

Furthermore, in an increasingly online world, we have seen many real estate development firms that were once concentrated in a single city extend their reach and enter into new markets.<\/p>\n

Related:<\/em><\/strong> Real Estate Crowdfunding: An Introduction<\/a><\/em><\/p>\n

Crowdfunding Challenges & Key Solutions<\/h2>\n

Naturally, one of the foremost challenges of crowdfunding is finding the right investors for the right projects. Social media, with billions of users worldwide, is one of the most useful channels for finding new investors, engaging them, educating them, and converting them into being investors with you.<\/p>\n

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The very fact that you are reading this article here, on BiggerPockets, is testimony to the power of the digital world. To succeed on social media, you will need to work diligently to test your messaging and create useful calls to action that are bolted together with marketing funnels that transport your prospects in their journey to getting to know, like, and trust you.<\/p>\n

This year, the need for effective communication is even more important, due to the fact that many potential investors are being especially cautious in light of the current health crisis. However, this indeed presents an extraordinary opportunity for sponsors to raise money online while everyone is glued to their computer screens, working from home.<\/p>\n

Related:<\/em> <\/strong>What Exactly Real Estate Crowdfunding Is\u2014And Why You Should Care<\/a><\/em><\/p>\n

Navigating a Difficult Market<\/h2>\n

Ultimately, to be successful, real estate investors will need to think long-term and begin \u201cplanting the flag\u201d in advance. Managing regulations, refining the messaging, and receiving positive affirmations of interest are just a few of the challenges of this competitive space. The so-called \u201cdemocratization\u201d of real estate is something that can be extremely beneficial\u2014rather than just pitching your deal to single individual, one at a time, the power of digital marketing can be leveraged to pursue everyone at the same time.<\/p>\n

In many ways, success in this competitive space is largely a numbers game. A firm can never know for sure which interested parties are most likely to invest. But what they can know is that by extending their growth and reaching a wider audience, they will be much more likely to get the attention they\u2019ve been looking for.<\/p>\n

Of course, communication is also very important. Being able to clearly express the value that is being added can help a firm develop a more effective messaging strategy. What kinds of words, phrases, and ideas do you want to have associated with your company? Are you just a real estate development team\u2014or do you hope to play a crucial role in the ascendance of your community?<\/p>\n

Again, it is easy to see why planting seeds is so important. You might not know who your next investor will be, but if you leverage your resources and are able to effectively pursue multiple potential investors at once, you will be much more likely to build the team necessary to achieve your long-term investment objectives.<\/p>\n

See part of the author’s conversation with ($12 billion) Jamestown President Michael Phillips about the challenges of raising money online in this short video:<\/em><\/p>\n