While overall real estate sales in Dubai alone reached AED 18.3 billion in May 2022, not every prospective investor has access to large sums of equity. Things are changing, though, and markets are becoming more accessible in a variety of ways. Indeed, crowdfunding is now an interesting potential for real estate investment.
What is the definition of real estate crowdfunding?
Essentially, crowdfunding allows company owners to raise funds from numerous sources rather than seeking a single or small group of investors for a large sum of money.
Crowdfunding has become a popular alternative to more traditional ways of financing among real estate investors in recent years. It appeals to a large range of investors who each donate a little quantity of money for the real estate project.
This new financing way is mainly accessible online throughout dedicated companies.
What are the benefits?
Whether you are an expert or not of real estate, financing an asset can be difficult. Since it became available in the real estate business, many investors have profited from adopting crowdsourcing as an alternative of generating funds.
More possibilities: Real estate crowdfunding expands your pool of possible investors while also increasing your funding options. Crowdfunding allows you to reach out to friends, family, business associates, and external investors. Crowdfunding eliminates the need for loans by providing simple access to credit and capital.
A network opportunity: Crowdfunding may also be used to promote a business. Crowdsourcing is an excellent marketing strategy for businesses. Using social media and crowdfunding platforms, real estate investors may simply expand their investor network.
A learning journey: It takes time for word-of-mouth and client loyalty to spread, but after a few successful crowdfunded projects, you'll see a significant increase in your professional network. Listening to the comments of experienced investors might help you identify areas for development.
Proof of concept: A successful crowdfunding campaign may demonstrate the popularity and feasibility of an idea. During campaigns, compelling project content has the potential to attract new investors and gain support via connections built on your enthusiasm and hard work. Your investors will care about your success once they have invested in you, not only because they know you.
How to Create a Real Estate Crowdfunding Platform?
If you want to build a website or platform and benefit from this business, you need educate yourself on both crowdfunding technology and the real estate market. The more you learn, the better judgments you can make - and your understanding of either crowdfunding or real estate may help you detect market gaps. There are other white label software options available, such as LenderKit, that may help you go to market faster. They also assist with certification, compliance, and other technical aspects of developing a software platform.
Example of crowdfunding companies
Among the crowdfunding companies, we can mention:
- SmartCrowd
- Stake
- Aqarchain
Crowdfunding's Future
Real estate investing in the UAE, notably in Dubai, may shift toward crowdfunding in the future. Dubai continues to provide one of the most enticing rental returns in the world to investors.
Aside from risk diversification, real estate crowdfunding provides additional benefits such as digitalisation and access to the real estate market, both of which generally require a large amount of funds. Contributing through a crowdfunding platform allows investors who cannot afford to make large donations to profit from modest amounts of funds, while crowdfunding operators get access to a large pool of retail investors.
Contact us if you need more information about crowdfunding!