Posted On : November 9, 2022
Value added of real estate crowdfunding platforms[for investors]:
1. Real estate project sourcing for crowdfunding
2. Selecting projects and gathering required documentation
3. Publishing projects for crowdfunding
4. Promoting real estate crowdfunding projects
5. Documenting project closure and executing asset pledge
6. Paying out interest rates and principal amount
7. Overtaking the asset and realizes it in the market if f something goes wrong
They source the real estate crowdfunding projects. Usually real estate crowdfunding platforms has a network within certain countries cities of brokers and partners, who are introducing various real estate funding opportunities. Real estate is doing initial screening and selection of preferred projects.
They select preferred real estate projects, gather documentation and help to prepare project descriptions. Later these are published and added under project descriptions. They describe in a unified way, that investor could read it and interpret project by project.
Real estate crowdfunding platforms publish projects in the platforms for the investors to evaluate and decide on investment. Platforms are defining the number of days, how long the project will be available for funding.
Real estate crowdfunding platforms promotes projects for their community. In some cases platforms are promoting projects on wider scale by marketing them via google ads or social networks.
When the real estate crowdfunding project is funded, platform takes care of money transfer to the real estate crowdfunding project developer as well as executes asset pledge in respective authorities. The process itself is quite complex, but platforms streamlined it by applying standard / non-negotiable contracts, which are agreed with notaries.
Once real estate crowdfunding project is closed, starting from the next month (depending on the loan structure) platform collects interest payments from the real estate crowdfunding project developers and distributes to investors according to agreed scheduled. Process is fully automated.
Not all the time real estate projects are going according to plan. In case project developers faces some challenges in repaying interest rate or principal at the end of the project, platforms are taking over the pledged asset and realizing it in the market. Received proceeds after platform taxes are being distributed to the investor.
Value added of real estate crowdfunding platforms[for project developers]:
1. Providing unified project structure and KPIs
2. Support in doing project descriptions and agreements
3. Promoting project and securing funding [if funded successfully]
4. Help in managing payments
While doing real estate crowdfunding project assessment, platforms help to structure the project in terms of structure, which is commonly used in the market: asset price / valuation, construction costs, budget, sales plan and etc.
Real estate crowdfunding platforms helps to prepare business case and description, which would be acceptable to the investor. This is a time consuming process as not all the developers are used to that.
By placing the project in the real estate crowdfunding platform allows investors to invest in the project. For certain projects, platforms are adding extra marketing efforts to market them outside their communities.
Once project is closed, real estate crowdfunding platforms provides an automated interest rate distribution process for all the investors invested in the platform.
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