This is the part one of a seven-part series on crowdfunding.
With new technologies, new laws, and new trends, it is clear we are in the midst of a new and important era in real estate finance—and it’s all thanks to crowdfunding. In just the last few years, both the real estate fundraising and digital marketing industries have undergone a dramatic transformation. With the right tools, knowledge, and systems in place, you can take advantage of these changes and build your portfolio with an increasingly large pool of investors.
It is often said that “a journey of a thousand miles begins with a single step.”
In the world of commercial real estate, this first step inevitably involves the need to raise capital.
During the next seven articles in this series, you will learn how to crowdfund your real estate projects. You will learn some brand new skills you can use that will bring you immediate, tangible benefits by simplifying the way you raise capital.
Especially in today’s era of great uncertainty, raising capital online has become an important option for sponsors wishing to adapt to work-from-home and social distancing trends, and their implications for the way business is conducted. In fact, thanks to new technologies and the rise of real estate crowdfunding, there are many things you can immediately do to raise all the capital you need that are being bolstered by these changes.
In part one of this series, I am going to introduce three of the core pillars to raising more money online for your projects through a few simple types of automation.
By making the effort to automate, you can get on with finding more deals while investors gravitate to you without you having to go out to find them. Not only will you be able to pursue your projects more efficiently, you’ll also gain access to a much wider network of investors.
The more things change, the more they stay the same.
It’s hard to believe how much technology has changed over the last couple of decades, and yet real estate seemingly has changed very little in comparison. While I have sat through hundreds of in-person meetings to raise the half billion or so of equity throughout the course of my career, I have always wished for an easier way.
And now there is one.
Finally, technology and real estate are merging and at the intersection is automation where relationships are established remotely, online, without real-time interaction between sponsor and investor. Just as this article communicates an idea to you, so can you telegraph your story to investors passively by doing it online in a way far more convenient than ever has been possible before.
By using systems that are commonplace in other industries, and sales and marketing methods that have been refined over 100 years, real estate is being transformed—especially when it comes to fundraising.
Today, sponsors are raising millions of dollars within minutes of launching their campaigns. Crowdfunding platforms like Crowdstreet, RealCrowd, RealtyMogul, Fundrise and others have between them raised billions of dollars of equity from tens of thousands of investors. Their stories and those of the sponsors who have taken up crowdfunding to finance their projects are truly inspiring and incredible.
By putting in the legwork upfront, you can also put yourself in a position where you can raise large amounts of capital in a very short amount of time and here’s where it begins ... with education.
Ultimately, the entire journey to successfully raising money online starts and ends with education, and you know what? It’s no different from what you do now.
When you sit down with a new prospective investor, you immediately start educating them. You teach them about your background and experience, about your track record and lessons learned, and eventually you show them your deals and guide them through understanding those.
Nothing’s changed.
It just saves so much time when you’re not repeating everything over and again for each new prospect, so is more effective, more productive, and frees both you and your prospects from the burden of in-person pitch meetings you don’t want to make and they don’t want to sit through.
Here's an outline of what we’re going to be going through in this special series:
- A Framework for Building Your Investor Lists where you don’t have to go out searching for them, they come to you.
- The One Thing you need to do to develop a relationship with prospects without even having to meet or talk to them.
- A Formula for Perfecting Your Messaging to make it so compelling to investors that they become predisposed to investing with you before you even pitch a deal.
While the idea of raising money from investors online without needing to meet or talk to them sounds implausible, there is a key to unlocking the code to success.
It’s all about building trust.
People find it difficult to trust somebody they’ve never interacted with in-person and yet trust can be established in many different ways, many of them old school ways adapted to the digital world. Branding, messaging, networking, posting on social media, and effective media placement are just a few of the ways you can go from being unknown to a prospect to being seriously considered as an investment partner.
Trust is what helps create—and sustain—long-term relationships.
Just as the burden of proof is on you to convince your investors to give you capital, the burden of proof in this series of articles is to show you how the world of fundraising has permanently and irreversibly changed by actually demonstrating to you how you can do it yourself.
This is all brand new to commercial real estate and you would not be alone if you were skeptical. In fact, I too had doubts when I first heard about raising money online for commercial real estate. However, I was also intrigued.
I saw that the intersection of digital marketing and online crowdfunding presented a tremendous amount of potential for the real estate industry.
Make no mistake, once you have the right systems in place, raising capital for real estate has never been easier, but getting them set up takes commitment. Like developing a new building where the challenge of the entitlement, construction, and lease-up phases are long forgotten once the rewards of ongoing income streams start rolling in, so raising capital online requires work before the benefits are enjoyed.
In the next installment of this series, we’ll take a look at the unique conditions that have aligned to make raising capital online something that before was thought to be the impossible and has now become the norm.
Adam Gower, Ph.D., who is an authority in real estate crowdfunding and is known as the creator of the Investor Acquisition System, combines a lifetime of experience in real estate investment and finance with best-of-class digital marketing tactics, techniques, and strategies to help crowdfund real estate syndications. Find out more in this new book, SYNDICATE or at GowerCrowd.com