Are you familiar with the concept of real estate crowdfunding?
It is the most transformative force behind democratizing investors’ participation in real estate ventures. The concept emerged around 2006-2007 and is now a billion-dollar industry. This concept paved the way for building real estate crowdfunding platforms, making real estate investing accessible to a broader audience with lower investment minimums.
The global real estate crowdfunding market is expected to reach around $43 billion by 2027, indicating a significant growth trajectory. With this in-depth guide’s help, you will learn how to develop a real estate crowdfunding app like Fundrise, a frontrunner in this sector. So, let’s get started with this blog.
What Is A Real Estate Crowdfunding App – A Brief Overview
A real estate crowdfunding app is a platform that bridges the gap between investors and promising real estate projects. These apps provide investors with opportunities to invest in various real estate assets. In addition, these apps give realtors a chance to pool capital from a diverse group of individuals. The app offers features that leverage advanced technologies like data analytics and machine learning to streamline the process of raising money & acquiring properties.
There are mainly two types of real estate crowdfunding apps: equity-based crowdfunding platforms and debt-based crowdfunding platforms. Equity-based crowdfunding platforms provide investors with finances to own a real estate property. On the other hand, debt-based platforms give loans to realtors for real estate projects.
One of the real estate platforms that emerged as a leading player in this sector is Fundrise, founded in 2012; it is the most successful real estate crowdfunding brand. It is one of the prime examples of a real estate crowdfunding app with more than 1,40,000 active users. It is a prominent real estate crowdfunding platform that initiated this innovative approach.
Fundrise has started encouraging average investors to engage actively in real estate projects while diversifying their portfolios. The success of Fundrise has made the real estate crowdfunding app a lucrative business venture.
Why Should You Invest In Building A Real Estate Crowdfunding App?
Before investing in an app development, you should ask yourself why you put your money into starting a real estate crowdfunding platform. The remarkable growth of real estate crowdfunding apps has been extraordinary in the last couple of years. Data from Allied Market Research reveals that the real estate crowdfunding market is about to reach a staggering $157.2 billion by 2030, with a CAGR of 16.4% from 2021.
This outstanding growth is driven by a number of factors, including:
- Increasing demand for alternative investment options in the real estate industry
- Technological innovations in the crowdfunding apps that facilitate seamless transactions.
- Growing awareness regarding the potential benefits of real estate crowdfunding.
- The demand for passive income is always high, and the real estate sector has been a proven source of enhancing passive income.
- The rapid growth in global real estate projects makes realtors seek many potential investors besides financial institutes or banks.
As we can see, building a real estate crowdfunding app is undoubtedly the most rewarding and exciting business idea for 2024.
How do Real Estate Crowdfunding Platforms Function?
Real estate crowdfunding involves multiple stakeholders, including project sponsors, investors, and third-party service providers. The working of a real estate crowdfunding platform has the following process.
- Platform Registration: Investors and developers register on the platform and create their accounts.
- Project Submission: The app allows realtors to submit their proposals with detailed project information containing property details, financial projections, and investment terms.
- Project Scrutiny: The real estate crowdfunding platform conducts a detailed assessment of the submitted projects, which involves evaluating the realtor realtors track record, assessing the property’s potential, and ensuring transactional compliance.
- Project Approval: Approved projects are listed on the platforms, and investors can browse and track appropriate projects for investment.
- Investment: Investors browse and select projects based on their preferences contribute funds to promising projects and receive an ownership stake.
- Project Execution: Investors browse and select projects based on their preferences, donate funds to promising projects, and receive an ownership stake.
- Returns & Distribution: Once fully funded, the real estate developer executes the project, and investors are regularly updated on the project’s progress through continuous notifications from the app.
