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 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 and 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.
Essential Features Of A Real Estate Crowdfunding App
If you want to build a real estate crowdfunding app like Fundrise and compete with it, the first thing to do is prepare a feature list for your crowdfunding app for real estate. Listing out these features will help you launch your MVP as soon as possible among your targeted audience and collect feedback. The below-mentioned list of features will help you develop a real estate crowdfunding app.
1: User Registration & Sign In
Every app has a registration system for first-time users, and the real-estate crowdfunding apps are no different. The app allows investors and real-estate developers to create their accounts by entering the required details, like personal info. Users can then sign in through their social media accounts or email addresses. The user registration of your crowdfunding app must have a two-factor authentication, which requires entering an OTP for sign-in. Also, consider attaching a biometric authentication like fingerprints to this feature.
2: AML & KYC Validations:
Crowdfunding apps must deal with a large volume of real estate transactions daily. So, to make sure these transactions are secured, you need features like AML (Anti Money Laundering) and KYC (Know Your Customers). These features can help you run due diligence on the users to verify their identity and income source. Checking on AML and KYC will enable you to link the users’ bank accounts with the app and authenticate their eligibility against the laws and regulations.
3: Property Listings
The real estate crowdfunding platform is incomplete without listings. The feature showcases all the listed projects with comprehensive details on your screen, including available investment opportunities and asset locations. In addition, the listings also present asset type, expected return, risk profiles, and investment terms. Real estate developers can use this feature to describe their projects and potential investment returns. While creating the listing page, consider building an intuitive search engine to categorize projects based on their estimated holding period, site, reviews, risk-taking, etc.
4: Investment Dashboard
Your real estate crowdfunding app must have a separate dashboard for investors, allowing them to get valuable information about their functional status, return on investment, and overall performance. In addition, the feature displays real-time updates on project progress and financial metrics and provides investors with valuable insights to make informed decisions. To build a real estate crowdfunding app like Fundrise, consider incorporating a one-time investment option in your app dashboard and monthly contribution system.
5: Returns Calculator
Real estate crowdfunding app development should also have an automated returns calculator enabling investors to calculate their earnings, risk probabilities, and investment amounts. It would help if you equipped your returns calculator with an in-built mortgage earning prediction system to help investors make data-driven decisions and analyze vital financial metrics such as ROI percentage, losses, and recoveries.
6: Earnings Withdrawl Mechanism
As investors earn returns on their investments, a seamless and efficient earnings withdrawal mechanism is essential for maintaining investor’s trust and fostering transparency. A real estate crowdfunding platform must have an automated withdrawal mechanism to streamline and expedite the withdrawal of dividends or appreciation, allowing investors to start and manage drawing requests from their accounts. Consider deploying a multi-tiered withdrawal limit to help investors remove smaller amounts with lower fees. The feature should have a real-time withdrawal tracking system as well.
7: Auto Fund Allocation
Developing a real estate crowdfunding app requires an automated fund allocation method that seamlessly distributes funds based on the budget, risk factor, and returns. The feature runs with coded algorithms that ask investors about their financial goals and plans and, depending on the answers, formulate an effective fund allocation strategy and give them preferred listings accordingly.
8: Notification & Alerts
A real estate investment platform like Fundrise must have advanced notifications, and real-time alert features that push notifications about new investment opportunities, project updates, and regulatory announcements. The feature also enables investors and project developers to get alerts for upcoming events, investment deadlines, and allocation of ROI.
9: Customer Support
If you intend to start a real estate crowdfunding platform, you should incorporate an effective customer service or helpline feature enabling you to answer user’s queries. The customer support feature can help investors and realtors talk with the experts anytime. With this feature in your app, you can assist users with basic tasks like resetting passwords and creating profiles. In addition, investors can get valuable insights on how to invest in a particular real estate project. Consider developing a messaging or chat functionality for this feature to facilitate seamless communication between investors, project developers, and experts.
Read more - https://logic-square.com/build-real-estate-crowdfunding-platform-like-fundrise/
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