Setting Yourself Apart in Crowdfunding

Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Kelly: Hi, I’m Kelly McDonald. I’m the Vice President of Residential Debt here at RealtyShares, and I’m here today to talk to you about how to set yourself apart from the others on a crowdfunding website.
Mike: This REI Classroom real estate lesson is sponsored by theinvestormachine.com, FlipNerd’s private investor coaching program, and your blueprint to investing success.
Kelly: To create a great listing on a crowdfunding website, you’re going to want to start before you even post your listing. Remember, the crowd’s going to do their own diligence, so in order to make sure that you stand out from the crowd, the very first thing you’re going to want to do is have a detailed scope of work that not only explains your vision for the property, and how you’re going to add value to it, but also shows the costs that are associated with it, and that you are going to have some professionals that are going to be working with you on the project.
The second piece of it is you’re going to want to make sure that you provide a detailed track record that not only shows when you bought the properties that you’ve done before, how much you put into them, but also how much you’ve exited and profited with them. The crowd is going to look this up. There’s lots of public information on the sale of property, and they’re going to know what you sold it for, and what you bought it for. So make sure that information is accurate.
The next thing I would say is get as many pictures as possible of the property. Now, don’t just rely on the appraisal alone, the crowd knows that your property is ugly right now. That’s what they’re investing in. They’re investing in you to make it beautiful. Don’t be afraid to showcase some of the work that needs to be done on the property. That’s what they want to see.
The next piece of it is you’re going to want to make sure you have a really great biography that showcases your background and expertise in the industry. And if your property is of great value or a larger deal, you may want to even consider having a drone fly over. Here at RealtyShares, on any deal over a million dollars, we do a drone flyby to make sure that we really showcase the value and the beauty of the property both before and after.
Now, in terms of post-closing, once a deal has been funded, this is really when you just get started, in terms of becoming a crowdfunding darling. What you’re going to want to do is make sure that you’re using a lot of communication. Work with the asset management team to give them regular updates, send in new photos, new pictures, so that they know and they can post that to the crowd, and the crowd can see all the work that you’ve put into this. There’s a very real repeat sponsor effect on crowdfunding websites. Once you exit a deal and the crowd gets their money back, and the profits along with it, they’re going to be very excited and want to fund your project again and again, but only if they had a good experience during the first project.
You can consider the crowdfunding company as your back office. They’re going to manage working with the investors and answering most of the questions for them. Occasionally, an investor may have a very specific question that only you can answer. At that point, the investor relations or the asset management team may reach out to you. Make sure that you get back with them right away, and answer that question as thoroughly and as quickly as possible.
The crowd, again, these guys put their money up to make you successful, they’re just asking in return that you give them that information. And you take these things to heart, and you put up together a great listing, and follow up with excellent communication, you’ll be a crowdfunding favorite.
Thanks again. I’m Kelly McDonald at RealtyShares. If you have questions, or you want to talk further, my email address is [email protected]. Thanks so much.
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