Real Estate Crowdfunding Platforms: Commercial

The first and perhaps most popular form of real estate crowdfunding platforms are those that lend to investors buying commercial property. These are often very short-term loans that enable the investor to make the purchase. Often, the investor plans to refinance out of the peer loan within a short period, and the payback can come within a couple of years. Other times, the investor uses the money they are making on rents and leases to pay things back. And finally, sometimes the developer will flip the investment for a profit, which is how they will afford to pay something back.

Unlike real estate crowdfunding, where the investor buys a stake in a project and gets a percentage of either resale or a stake in the lease or rental income, this type of lending usually has a fixed payback at a specified rate. This transaction may have less risk on both sides since the investor cannot collect even more money than expected, and the developer does not have to worry about giving away too much equity. However, these loans usually have a much shorter term, which can be suitable for the investor but challenging for the developer.

Real Estate Crowdfunding Platforms: Fix and Flip

Perhaps the next most popular real estate crowdfunding platform form is the “fix and flip” (or sometimes fix and hold) type. This type of transaction occurs when a developer or contractor buys properties that s/he feels will be worth much more than their purchase price plus the renovation cost. These loans are usually given to offset either or both of those costs, and then the developer either sells or refinances the property after the work is done to pay off the loan. In these cases, unlike crowdfunding, a set amount of interest is paid back (with crowdfunding, the investors may get a percentage of the resulting value after a property sale).

Fix and flip real estate peer-to-peer lending carries the risk that the renovation will not be done on time, that the costs will be significantly more than predicted, leading the developer to walk away and default on the loan, or that the resulting home does not sell and is not worth enough to be refinanced.

Investors can mitigate their risk by choosing loans where the developer has personally secured the loan with other assets, making sure that they understand what cost overruns might occur, choosing a developer who has done this multiple times and has paid things back each time, and researching the geography to be sure that the projected value makes sense. Of course, the investor will also need to be sure they use a reputable real estate crowdfunding platform that requires an independent appraisal and verifies financial information provided by the developer.

Real Estate Crowdfunding Platforms: Multifamily, Shopping Centers, and Apartment Complexes

A prevalent real estate crowdfunding platform type involves multifamily units and apartment buildings. These are a cross between commercial and mortgage lending in that the payback relates to the income generated by the property, although in many cases, the payback is just like a mortgage. In the former case, only accredited investors can invest, but investing may be open to everyone in the latter.

Remember that most multifamily and apartment real estate crowdfunding platforms involve much more significant amounts than mortgage lending for a single property. It would be best to do your homework to ensure the buyer/developer can pay things back. You must carefully assess their history of paying back these investments, their regular credit history, and the challenges in making the new investment successful.

Real Estate Crowdsourcing Summary

We can summarize this section by asking why each group involved might want to pursue this form of crowdfunding:

Why real estate crowdsourcing: Developers

If you are a developer, can pay off a mortgage loan quickly, plan to do a traditional refinance after fixing a place up, will get significant immediate revenue from the property, or cannot qualify for a more conventional loan than peer mortgage lending may be a good thing for you as an applicant.

On the other hand, if you need longer to pay things off, are unsure whether you could meet investor demands as far as returns based on revenue, are not sure if a refi after a fix-up will be prudent, or find better rates from banks, then a traditional loan may be better than peer to peer real estate lending.

Why real estate crowdsourcing: Investors

If you are an investor and want to round out your portfolio by investing in loans that have a specific piece of collateral, are guaranteed by a developer who has fixed and flipped successfully before, or believe that one particular real estate project will generate revenue, then peer to peer real crowdfunding may be for you.

On the other hand, if you want a less risky option, want your investment to be immediately liquid, or cannot find a developer who seems almost to guarantee a substantial payback, other means of investing may be better.

Largest Real Estate Crowdfunding Platforms

The following are the most prominent crowdfunding sites for real estate. There are many platforms in this category, so you should do your homework to find the best sit, whether one of these three or another:

1. RealityMogul service provides an opportunity to invest in real estate for a reasonable minimum of $5,000. They offer both debt and equity real estate investing. They vet specific investment properties, hoping you will invest and share in the ongoing profits.
2. Fundrise site is based in Washington, DC, and while relatively new, it has gained a lot of members quite quickly. Fundrise gives both accredited and non-accredited investors the chance to invest. With a total value of the properties available of $2.6 billion, they are certainly one of the biggest.
3. RealtyShares services has received much positive press and is now one of the largest crowdfunding sites in the real estate sphere. Their platform is easy to use, but as with the others, you must ensure you do your homework, including understanding the risks and benefits.

Our Services

There are other possibilities beyond the above three as well. While an argument could be made that the most prominent crowdfunding sites will have the most opportunities for investors and will attract the most investors, there are niche sites that may be a fit for your project or investment interest. There are also white-label opportunities for you to create your site independently.

Please feel free to contact us whether you are a developer or an investor if we can help connect you with the best real estate crowdfunding site. For developers, we can help you craft your pitch and negotiate the best terms with the platform, and for investors, we’d be happy to provide information that may lead you to the best site to meet your goals.

The post Real Estate Crowdfunding Platforms first appeared on Performance Psychology Group, LLC.

Here is a good article from Nerd Wallet

Crowdfunding for Business M&A

Crowdfunding for business can often fund a merger or acquisition (M&A) that will make the company stronger and more competitive. This type of funding may be preferred by investors who see that the new and larger company will be financially more solid, even if they need cash to complete the transaction.

Crowdfunding for mergers and acquisitions is a relatively new concept that has gained some attention recently. Traditionally, M&A deals involve large corporations or private equity firms that pool significant financial resources to acquire other companies. However, crowdfunding allows a broader pool of individuals to participate in the M&A process by collectively providing the necessary funds to finance the acquisition.

There are specific crowdfunding platforms that cater to M&A transactions, connecting potential investors with companies seeking funds for acquisitions. These platforms often conduct due diligence on companies seeking funding and facilitate investment.

Business Crowdfunding Decisions

Of course, the first and foremost decision you need to make when looking into business crowdfunding is whether it is the right way to go as opposed to more traditional funding sources. It would be best to look into both and apply for the more conventional route. You may find that bank financing is quicker and requires less legwork, and even if it is a little more expensive, you may have to weigh the cost-benefit of that added expense. If you are turned down by the bank or find that the restrictions in terms or the amount you can borrow would make it a poor choice, then things are easy, but sometimes it may be a little more challenging to choose, and you’ll need to take your time and weigh things out a little.

Once you have decided to either pursue crowdfunding for business or at least apply and see how things go, you’ll need to decide on a route. Choosing the best crowdfunding platform is your first need, and there are generally three steps involved in this task:

Find a good business crowdfunding website

Decide if you want to go the more popular route and find the best crowdfunding website. This will point you toward any of the many excellent sites that give you the tools and resources to set up your pitch to the crowd. You’ll want to narrow your choices by looking at which sites seem to have businesses like yours making their pitches and which ones are leading to success – in other words, they have the investors that might fund your business. After that, it may come down to preference regarding the tools and resources each site lends.

White Label Business Crowdfunding

If you are unsure if that more popular way is the way to go, think about white-label business crowdfunding. This is a more independent approach where you create your website and market it through direct marketing, search engine optimization, or hiring a service to get the word out. Of course, this approach allows you the most control over your pitch and the look of your site and will enable you not to be directly up against other businesses in listings. White-label business crowdfunding has the challenge of getting investors to find your pitch.

Crowdfunding for Business Metrics

Finally, it would be best if you decided on the metrics you will use to judge the success of your crowdfunding for a business pitch. You will need to be patient, but you also need to know when to change things up a little – when should you try a new crowdfunding website or switch between an aggregate website and a white-label approach? The most important part of this decision-making is to balance leaving your pitch out there for long enough and changing things up.

Crowdfunding for Business Investing

So what if you are on the other side of the crowdfunding equation and are considering investing in a business, product, or service? What process should you go through to do all the homework you need to do? Once again, we can sum business crowdfunding for investors into three steps:

What type of business crowdfunding

You may want to decide which type or types of business crowdfunding you want to invest in. Do you want to look for a promising new product or service that is about to launch, or do you want to help a promising company improve its operations and management? Are you excited about a specific business moving into good geography, or do you like them taking over a smaller business to get stronger? Each of these choices has challenges and opportunities, and to wade through the multitude of pitches, you may want to narrow down what you are looking for.

Which crowdfunding for business website

Now you want to find a crowdfunding for business website that you like. Of course, you may want to find a white-label crowdfunding pitch where a company creates its website, but most investors are drawn to any number of popular crowdfunding for business sites. Look at the various choices and see which platform you like – which seems to give the information you want about each prospective option and attracts the companies you might be interested in investing in.

What is important to you?

Finally, decide on some metrics to narrow things down. There may be a lot of pitches for crowdfunding for business that you like a lot, and you will want to be scientific about which ones you might follow. The actual metrics you choose will depend a lot on the investment you will make.

We cover equity crowdfunding websites separately.

Crowdfunding for Business Summary

Companies often need financing for ongoing operations, and the crowd may provide better and more flexible terms and a better rate. It also allows the company to potentially form relationships with funders for future needs. And with crowdfunding for business, a company can attain some level of PR and notice since many people may learn of their pitch. However, any business needs to look into all funding opportunities, as business crowdfunding may not be the answer. Sometimes the stability of a bank loan and the fact that you may be able to borrow higher amounts without updating things regularly may be attractive. The information on this page can help you decide whether turning to the crowd should be one possibility, but you should still make sure you know the pros and cons of all options.

For investors crowdfunding for business ongoing needs, as opposed to start-ups or other types of crowdfunding, can be an exciting but less risky way to go since the company already has a track record of success. Joining with other funders to become a genuine part of an exciting improvement in operations or launching a new product or service can provide added interest. But the bottom line for both companies and investors is that you need to be sure that business crowdfunding is a fit.

How We Can Help

We can help! We provide free platform match services where we can explore every possible crowdfunding for business platform available and the plusses and minuses of each. Beyond that, we have fully guaranteed services to help you design a pitch and attract the most investors.

The post Crowdfunding for Business first appeared on Performance Psychology Group, LLC.

Personal crowdfunding also provides a path for people you know, even family, to send you money in an organized fashion. This page covers personal crowdfunding, focusing on online fundraising ideas and your choices in personal crowdfunding sites. Note that these raises differ from peer-to-peer loans in that there is no expectation of payback, or payback is expected to take a long time and is not guaranteed.

Types of Personal Fundraising

Before we go into how to choose between personal crowdfunding sites and how to invest, we should go over some of the types of this type of crowdsourcing that may exist. This is not by any means an exhaustive list, as people have turned to fundraising platforms for a wide variety of purposes that they feel investors or donors may find compelling. Here are five of the more popular possibilities.

Personal fundraising for an event

Personal crowdfunding for an event: This type of crowdsourcing may be used to fund a wedding, bar or bat mitzvah, or anniversary trip. People may be motivated to give money to these requests because they want to support a specific type of person, perhaps someone who has faced certain challenges or comes from a particular background, or they may know the requester and are giving in an organized fashion to him, her, or them. This may or may not be “rewards-type” because you may receive something of value related to the trip or event.

Personal fundraising for a mission trip

This type is self-explanatory. If you plan to go to an underprivileged area or one just struck by a natural disaster, you may turn to the crowd for assistance. Usually, there is no reward beyond perhaps getting updates in photos or videos. You hope that people you know and spread the word to, or even people in the crowd who you do not know but are looking to fund something, will invest in your mission.

Personal fundraising for charitable causes

Like the above, you may look for personal crowdfunding for a charitable cause you are collecting for. Everything from environmental cleanup to helping a family in need to rescuing an animal could be in this category. And like the above, you might be setting up a personal crowdfunding site that you will send people you know through word-of-mouth or hope to promote through search engine optimization.

Online fundraising for a project

You might turn to the crowd for a project you are working on. Maybe you are installing a renewable energy source or building a baseball field in your backyard. Perhaps you are putting together a play or a musical. Or, possibly, you are creating a work of art. In any of these cases, you may need funding, and they all may do well with personal crowdfunding that allows you to keep people updated on your progress and motivate them to invest.

Why Personal Fundraising Sites?

Personal crowdfunding sites have become more popular recently, and for good reason. It is difficult to get traditional loan funding for personal purposes and even harder to get funding that is not expected to pay off. Grants are quite challenging to find and get as well. Most of the purposes listed above don’t have a specific piece of collateral (such as a house or car), and they don’t have a particular reason that the funding itself will make you more likely to pay the loan off (such as a better education leading to a better job). Thus, banks are hesitant to give personal loans over a minimal amount. When they do, there is usually a very high interest rate. Enter individual crowdfunding sites!

Donors in the personal crowdfunding area are willing to give money as either a very favorable-term loan or even a donation to your project with no expectation of payback. These investors can look into more profound factors than the project or purpose itself since sometimes they see this as a way to give back.

Applying to Personal Fundraising Sites

Getting personal crowdfunding is not a complicated process, but it does require time and effort. You need to spread the word about your cause or project and set things up so people who might invest can find you. Unless you are quite good at building a website and doing search engine optimization, it usually involves finding the best personal crowdfunding sites for your purpose and picking among them. There are three steps to applying for personal crowdfunding:

Crafting Your Pitch for Personal Fundraising Sites

There is a lot of competition when it comes to personal fundraising, so you need to craft the most compelling pitch possible, one that gives investors an idea of what you are looking for and why quickly. You must ensure you have written a detailed description of what you will do with the money and why. There needs to be a timeline that shows how realistic your planning has been. This pitch must be brief enough that the crowd will not lose focus but with enough information that they can differentiate your pitch from others.

Communicate with Donors through Personal Fundraising Sites

As people donate to your personal fundraising pitch, show them how much you value them and respect their decision to donate. Stay up-to-date with updates to make these existing donors happy with their choice (and maybe they’ll invest more!). This may also help you attract new support as people looking at your pitch see how you treat already invested people. Even if you receive a direct question, if it’s something you think others might want to hear about, ask that donor if they’re okay with you sending out the answer more generally.

Remain Transparent and Open

It is okay if your plans change a little or your timeline shifts. The important thing is to make sure existing and prospective donors know about this. More than wanting to know that your plan is exactly running on schedule, they want to know that you are trustworthy and thoughtful regarding the goal you are setting. Most investors know that everything may not be perfect on the way to your plan will unfold, but they want to know what you will do when you face an obstacle.

Our Services and Personal Crowdfunding Sites

We provide some guidance and assistance with personal crowdfunding as part of our mission to give back, so we charge only a nominal hourly fee for these services. There are also a lot of free resources out there, such as this nice article from Hongkiat. No matter what, we’d be happy to hear about your goals and provide some consultation and advice. If you are an investor looking into using personal crowdfunding to round out your portfolio or provide some charitable donations, we’d also be happy to advise you as well.

Please feel free to contact us if you’d like to hear more about our services or personal fundraising sites.

The post Personal Fundraising Sites first appeared on Performance Psychology Group, LLC.

Let’s review some possible general answers to “What is crowdfunding?”

What is Crowdfunding: General Answers

The general answer to “What is Crowdfunding?”

Crowdfunding is a process where peers decide to support a project or purpose financially, and in return, they get some rewards, favorable treatment, or potential financial return. This encapsulates things well, with little detail.

More Specific Answer to “What is Crowdfunding?”

Crowdfunding allows people to invest in the goals of another person or group, whether personal such as a significant event or trip; business, such as a product launch or expansion, arts-based such as funding a musician or play; or education, such as helping a student get through college.

“What is Crowdfunding?” from the entrepreneur’s side

Crowdfunding for the arts involves peers investing in a project, whether an artist, actor, musician, movie, or play/musical, where the investor either gets insider information and rewards or a financial payoff if the project is successful, or both.

“What is Crowdfunding?” from the investor side

Crowdfunding allows peers to invest in a person or company because they see the potential in the project or purpose they are pursuing. Investors weigh the benefits of the rewards or potential value they will get in return.

All of these definitions work, showing how the answer to the question “What is crowdfunding” often can be tailored to the person asking it. But what is the context within which this website works – how would we answer the question? And what if we also wanted to include the advantages and disadvantages of crowdsourcing? We go over all of that on this page.

Of course, Wikipedia is an excellent resource with an overview that helps answer What is Crowdfunding?

What is Crowdfunding: The Details

When people ask, “What is crowdfunding?” it may often be because they think of using this mechanism to get or invest money. They may have heard of a successful crowdfunding campaign in the news or watched a popular TV show involving crowdfunding. It is important to note that any answer to this question must be well-rounded. Crowdfunding may not be for everyone in every circumstance.

Please also note that whether to pursue crowdfunding may be the easiest choice you will make. The much harder choice becomes which crowdfunding website to choose from. More people struggle with that choice and make mistakes compared to those who make the wrong overall choice of whether to pursue crowdfunding. This is where we can help.

But first, you need to decide what type of crowdfunding to pursue.

What is Rewards-Based Crowdfunding?

rewards-based crowdfunding was the first type of crowdsourcing that was widely available and known. When people ask, “What is crowdfunding,” they may refer to the rewards-based type. The best answer is that rewards-based crowdfunding is a transaction where the crowd invests in a project or purpose, and in return, they get some preferred treatment, inside information, or an early preview of a new product or artistic endeavor.

Subtypes of Rewards Crowdfunding

• Funding for a performance artist or group, such as producing a movie, play, band, or musical. In this case, the insider advantages might be an invitation to rehearsals or a special early showing, meet and greets with the cast, or fun and interesting information as things are being created.
• Funding for an individual artist such as a painter, singer, or sculptor. The rewards might be similar to the above but might also include receiving the artist’s prints, recordings, or artwork for funding.
• Funding for a new product or an invention. In this case, the rewards might be receiving exciting news about the product’s development, prototypes, meet and greets with the inventors, early product models, or insider information.
• Funding for a start-up business. Very similar to the above, you might get interesting inside information, meet and greets with the staff, preferred customer status, etc. In the case of a non-profit or charity, you may do this for your philanthropic purposes.
• Finding a meaningful personal purpose. Opportunities in this area include funding a mission trip, an important event, a religious ritual, or a family event such as adoption.

Few regulations regarding rewards-based crowdfunding exist, so many people have dived in. Often the amounts you need to invest can be very small. For those hoping to get rewards-based crowdfunding, the challenges include having many competitors, needing many individual investments, and spending a good amount of effort on the rewards you promised.

Now when people ask, “What is rewards-based crowdfunding,” you can clearly define it, and the next section will help you distinguish it from equity-based crowdfunding.

What is Equity Crowdfunding

The easy answer to the question “What is equity crowdfunding” is to point to shows such as “Shark Tank” and say “that.” And, of course, this is how many people were introduced to this type of investing and funding. Equity crowdfunding describes a process where investors buy ownership of a business or a product, hoping to cash in later on this value when the product or company is successful. For investors, the risk/reward profile of equity crowdfunding makes it both attractive and worrisome, and where any particular potential investment lands on that continuum will determine whether the investor will make an offer and also guides how generous s/he is expecting the entrepreneur or company to be.

Subtypes of Equity Crowdfunding

• Funding for a start-up business. In this case, the money goes toward business operations. It often provides the start-up capital necessary to buy equipment and start production (if the business is based around a product), hire staff, and develop marketing materials (if the company is in the service industry).
• Funding for an individual entrepreneur with an idea s/he would like to develop. In this case, the funding goes toward developing and commercializing that idea.
• Funding for a new product within an existing company. In this case, the crowd funds just that new product but often does not get a stake in the company’s current products.
• Funding for business expansion. In this case, the equity acquired is related to a specific new geography or a new division within the company. The crowd then only owns a stake in that new territory.
• A small subset of this category is called “human capital contracts,” which are funding provided to get equity in a person’s success. For example, the crowd may pay for business school, but then a percentage of the person’s income will be paid back for several years.

Right now, the regulations regarding equity crowdfunding involve the need to be an “accredited investor” before you can invest in this manner. An accredited investor has a certain income each year or has a particular net worth. These requirements exclude many people from this type of investing, but they give the entrepreneur the peace of mind that the investors will come through with the promised capital.

Conclusion

In all, the answer to “What is crowdfunding?” whether you are turning to the rewards or equity type may help you decide whether to invest this way or to try to attract money for your project or purpose. Looking at websites to see what has been successfully funded and how the process went for that project on both sides of the equation may help you decide as well. The whole area of crowdsourcing has so many possibilities that it is hard to answer the question generally accurately, but we hope this post helped. As with any potential financial investment you will make or receive, doing your homework is critical, including checking with various sources.

Our Services

As a still-emerging way to get funding for a project or purpose, it makes sense that no one definition of crowdfunding has emerged. It is possible that given the diversity of reasons why people and groups ask for crowdsourcing, it may be that we will always need a handful of definitions to suit the multiple purposes and procedures involved. Please feel free to contact us to see if you have the answer to the question, “What is crowdfunding?” Do you think our services may be helpful?

The post What is Crowdfunding first appeared on Performance Psychology Group, LLC.

Types of Rewards-Based Crowdfunding

Insider information crowdfunding rewards

Offers from the person you will be investing in of insider updates and information. For example, if you provide rewards crowdfunding for a film, you might get updates about the actors who have been booked, the plot twists no one knows, or other aspects of production. If you are providing funding for a product, you might get discounts on that product or other products the company provides. And, of course, in-person “behind the scenes” visits offered to investors are always quite popular. We have a site dedicated to crowdfunding for indie films where you can explore the rewards that may be attractive to investors in that area.

Continued crowdfunding rewards

Updates and Information after the fact. There may be an interest in knowing how everything turned out long after the funding stopped. Whether the rewards-based crowdfunding was for a product, an artist, a group of artists, or a new small business, the updates do not need to stop after the funding does. A person involved in crowdfunding may get a wide variety of updates for a very long time, allowing them to follow the long-term, meaningful effect of the investment. Those who received the money are often glad to provide these updates for several reasons. First, it makes their journey more meaningful and personal, and second, there could be a time when they need additional capital, and keeping potential investors up to date is always good.

Rewards-based crowdfunding free items and discounts

Discounts and products. One great thing about rewards-based crowdfunding for small businesses or new product is that you might be able to be the first person to receive certain products, and you may get permanent discounts on the product or service. For those providing investments in areas where they have natural interests or products they have taken a liking to, this perk can be meaningful and enjoyable. This perk has advantages and disadvantages for the person receiving the investment. On the positive side, the crowdfunding investor becomes an ambassador for the product – a marketer for free to their friends and colleagues. On the negative, this perk can bring a variety of advice and feedback that can get confusing and intrusive.

Other Crowdfunding Rewards

Those looking for rewards-based crowdfunding will often be guided by the crowdfunding site in what perks to offer and how to make them meaningful. However, savvy investors may know how to ask for additional perks or things the person may not have thought of. This whole process can make the experience more meaningful on both sides and engage the investor more robustly than traditional investments offer. Once again, the difference between this type of investment and traditional funding is clear, and there often can be mutual benefits, but there is no equity exchange or loan repayment.

Crowdfunding reward ideas

• Meet and greets are great crowdfunding rewards, especially when the fundraising is for an artist or musician (or group of either) that funders may want to meet. These types of meet and greets could include getting autographs or other memorabilia.
• Learning opportunities can be excellent parts of rewards-based crowdfunding, such as when a promising or prominent business person is being funded, and the crowd wants to meet them and learn something.
• Get-togethers are also possibilities when it comes to crowdfunding rewards. This allows funders to meet and be with people who have similar interests. These get-togethers can be fun and can lead to lasting relationships.
• Early demonstrations and performances can often be had by those who initially fund an artistic or musical project or an invention. These rewards can be enjoyable for gamers who fund the development of a new game or funders of plays and musicals.

The above are just a few examples of crowdfunding reward ideas. If you are looking for this type of funding, you need to assess your project and your potential funding group and decide which crowdfunding rewards they might like. A focus group is one way to do that, as is following or researching a similar crowdfunding pitch.

Reward-Based Crowdfunding Method

If you are looking for reward-based crowdfunding, what process should you follow to get what you need? We break things down into three steps:

Look for a good rewards-based crowdfunding platform

There are many options for crowdfunding sites for rewards. Look for those that match what you propose regarding style, the types of investors they seem to attract, and the success of those with similar pitches. Once you have narrowed things down, make sure that you compare fees, customer service, and featurhttps://performancepsychology.net/best-crowdfunding-sites/es at each site.

We can help you design your rewards-based crowdfunding campaign and match you to the best platform for your raise. We can help whether your raise is fully rewards-based or if you are running a debt or equity campaign where there will also be rewards (thus potentially letting you give a bit less equity or a lower debt interest rate.

Contact us if you want more information or advice about rewards-based crowdfunding.

The post Rewards-Based Crowdfunding Overview first appeared on Performance Psychology Group, LLC.

Crowdfunding for Real Estate Pros

There are five primary benefits of crowdfunding for real estate:

1. You can research the investment company and the people behind it rather than having to vet each investment.
2. You can spread your investment over multiple companies or properties, lowering your risk and increasing the excitement of the investments.
3. The process moves much more quickly because these professionals have connections and know what they are doing. The closing could be long and challenging if you try to invest in real estate.
4. Unlike what happens if you invest in commercial real estate on your own, you do not have to do any management. Yes, you can hire a management company, but even in that case, you manage that company.
5. There is less chance for volatility. A commercial property with tenants or a storage facility that gains customers will unlikely lose all these customers overnight. In many cases, the financial situation is quite steady and predictable.

There may be other primary benefits of crowdfunding for real estate for you as well, such as tax benefits compared to different types of investment, and it always makes sense for you to talk to a financial advisor when it comes to assessing the unique benefits of any investment for you.

Crowdfunding for Real Estate Cons

A major disadvantage of crowdfunding for real estate is the possibility of losing money. Investing in real estate, whether through traditional means or crowdfunding for real estate, is not without risks. The entire real estate market could decline, or your specific investment(s) could have trouble. There is sometimes no way to mitigate risk as much as you’d like – even what seems like a safe and sound investment could struggle. There are other drawbacks as well.

The Investment is not liquid

You cannot easily pull your money from crowdfunding for real estate investment. You may be able to sell your share and get lucky that the property you’ve invested gets sold when you want it to, but sometimes you want the money out and don’t have an easy way to get it.

Crowdfunding for Real Estate Fees

There are service fees and sometimes certain management fees when you make a peer-to-peer real estate investment through a platform. Making a direct real estate investment cuts out the middle man and therefore cuts out those fees. Of course, most assets have costs, and it may be a situation where you merely have to compare and contrast.

More Research

You may need to research crowdfunding for real estate more than you do in other types of investment. For example, regular peer-to-peer loans are easy to explore – you look into what the return rate has historically been on a particular class of loans and assume you can get the same return. With crowdfunding for real estate, there are many other factors and trends.

Crowdfunding for Real Estate Process

It is essential to understand the process of crowdfunding for real estate. While it is simple, knowing exactly how it works can help you be successful. Here are the basic steps in the process

Crowdfunding for Real Estate Initial Steps

1. A commercial real estate development professional either builds a peer-to-peer lending platform or chooses one of the many established peer-to-peer lending platforms that work with real estate investments. S/he then applies to use that platform for the investments s/he will pursue.
2. The developer then looks for properties that appear capable of producing income. In some cases crowdfunding for real estate will be needed merely to buy the property, but in others, money is required to rehab or re-purpose the real estate. Sometimes these two initial steps are reversed, given that the developer may want to identify properties first so that the chosen platform can be the best fit.
3. Next, the crowdfunding for real estate campaign is designed and posted. The developer provides as much information as possible to give potential investors a clear picture of the property and its potential. The campaign also describes the background of the developers – they need to sell the potential investors on the project and themselves.

Crowdfunding for Real Estate Campaign

1. In some cases, the developer will buy the property before the campaign starts – such as when the investment will be used for re-purposing or fixing it up. In other cases purchasing the property is dependent on the success of the peer-to-peer lending campaign.
2. During the first few months, the investor gets information on how close the project is to being fully funded and any new information about the project. Once the project is either fully funded or at least funded enough for work to start, the investor gets information about the stages of construction as they occur.
3. Finally, once the construction is completed, the investor has one of two payoffs: In some cases, the purpose of the investment was to improve or re-purpose a property to sell it, and in these cases, the investor will get a percentage of the sales price; In other cases, the purpose was not only to improve or re-purpose but also to profit from ongoing rental income, and in this case, the investor will get a percentage of that steady revenue.

Real estate peer-to-peer lending is not for everyone. Still, if you are reading this and the advantages seem to outweigh the disadvantages, you may want to look further and go to a reputable website that provides a platform for crowdfunding for real estate.

The Entrepreneur Side

Crowdfunding for real estate is an excellent way for an entrepreneur to dive into real estate investing, whether traditional commercial real estate, multi-family living, or land. You may want the investment to pay for the down payment, to bridge things while you do some development or attract tenants, or to pay the entire investment price. Of course, the amount of risk involved in the loan, and perhaps the amount of risk related to certain aspects of your creditworthiness, will determine the interest rate you’ll need to pay and the limits on terms. You’ll need to make a pitch that suggests that the investment is good and that it and the rest of your financial background make you a reasonable risk for the investors.

Process for Investors

There will likely be a two-step process for the entrepreneur looking into crowdfunding for real estate, the first being some prequalification that suggests that you have a strong enough financial background to attract loans and pay them back, and then an application where you will list the information that will go out to prospective lenders about you and your project. Then once the funding is committed, the platform acts as a go-between, handling all aspects of the closing and funding process.

Our work with Crowdfunding Real Estate

Crowdfunding for real estate provides excellent opportunities on both sides of the equation. Still, given the more significant amounts of money involved than many other loans, due diligence is required on both sides. Proceed carefully, and the result could be a nice profit. We can help! We provide free guidance and can make connections with the perfect portal for your needs, whether you are an investor or entrepreneur. Contact us to learn more.

The post Crowdfunding for Real Estate Overview first appeared on Performance Psychology Group, LLC.

Crowdfunding for Nonprofits: Internal

Many corporations, including nonprofits, have some employee assistance fund to which their employees contribute directly or through fundraisers or perks. For example, in some companies, the ability to wear jeans on a Friday costs a dollar, given to the employee assistance fund. Or maybe there is a cookout, and the money charged is more than the cost of the food, so the extra is given to the fund. And then that fund can be used to further the company’s mission in some way – for a nonprofit or charity, this allows the employees to contribute just like the outside world does.

An Internal Website 

A nonprofit can set up a system on their intranet where people can post personal projects their department is working on. Perhaps in many cases, these departmental projects are, in some ways, those same things that might have otherwise caused them to ask for assistance from the above fund. Yes, the drawback to these types of crowdfunding for nonprofits at the company level is that there could be undue competition between departments and employees. Still, it might be a way to free up even more money, raise awareness of what different departments are doing, improve morale, and make employees feel closer to the mission. And, of course, it may be a successful way to raise money for critical projects.

We could even imagine a scenario where companies give a benefit of a certain amount per employee that could go to this fund. In other words, perhaps each employee had $100 each year, on top of her or his salary, that he or she could designate for any number of posted requests on the internal crowdfunding for nonprofits.

Crowdfunding for Nonprofits: External

Of course, most people reading this and looking into crowdfunding for nonprofits are thinking more about those platforms that allow for fundraising for a product or purpose, or perhaps an overall mission, from external sources. Many crowdfunding for nonprofits platforms of this type are available, and with only a few differences, they are very much like any other crowdfunding website. Here are the slight differences you might find when you use a crowdfunding platform for a nonprofit:

1. The fees may be reduced a little from other platform types. You may find that the website is designed to give nonprofits a break on the amount they will lose to fees and additional costs.

2. The platform will be designed to emphasize the nonprofit’s mission. In many cases, these companies want people to understand the depth and importance of their mission to encourage giving, so these platforms emphasize this.

3. Crowdfunding sites for nonprofits allow for comparison, meaning that they try to attract many possibilities for donors. Of course, you may feel that a drawback is that there will be more sites looking for money, but at the same time, this approach may also attract more investors.

4. Finally, crowdfunding platforms for nonprofits may also be organized in an easily searchable way for donors who want to choose among different companies with similar missions.

Crowdfunding for Nonprofits: Independent Sites

The examples above do not include a unique type of crowdfunding for nonprofits: the “white label” approach, where you build your independent website to raise money for your cause or purpose. The drawbacks are that you must start from scratch and create your traffic and search engine optimization. However, this may be an effective technique if you already have a website that people visit or a large following that you can notify quickly.

Nonprofit Crowdfunding: Conclusions and Our Work

These are just some of what you might find if your nonprofit company seeks fundraising on your own or through a crowdfunding portal. This can be an excellent way to engage with stakeholders and has the added benefit of getting the word out about what is essential to your company, no matter how much you raise. Extra work is involved, and you should be sure you have the resources to make it all work. That is where we can be helpful with our services. Many of our services are free, and the paid ones are discounted when we help with crowdfunding for nonprofits.

Please contact us if you’d like help raising money for your mission or want to use this approach for any purpose. We are here to help with your crowdfunding for nonprofits campaign.

The post Crowdfunding for Nonprofits first appeared on Performance Psychology Group, LLC.

Crowdfunding for Education Can Give You a Boost

Crowdfunding for education is growing in availability and popularity. The difference between education crowdfunding and peer-to-peer lending (or the closely related Human Capital Contracts) is that the latter has a fixed payoff schedule regardless of how the student performs during and after their education.

The students who turn to the crowd for crowdfunding for education are usually those who have high potential. Yet, they either do not qualify for traditional educational loans, or for whom the conventional choices will not cover the amount they need.

Investing in education crowdfunding can be fruitful if investors have realistic expectations and do their homework well.

Education Crowdfunding Process

Crowdfunding for education might be a simple investment in a person’s education where some payback is expected, just like traditional educational funding. However, the difference is usually that the student must go much further with a pitch that proves to the crowd that they will be successful after graduation. A resume or academic transcript to date might be presented, and the crowd must decide whether the student will likely be successful. With a limited number of investors who must choose wisely, the crowd must evaluate student’s grades and other aspects of their future potential.

Graduate School Education Crowdfunding

Crowdfunding for education that involves graduate school is a bit simpler. You already have your undergraduate success and maybe even some work experience behind you, so the education crowdfunding group can see how you generally perform academically and perhaps even how you translate that into the real world. In addition, your choice of graduate school paths gives the potential lending group information. If you are planning to go to medical school, they know what doctors usually make in the specialty you are pursuing.

Crowdfunding for Vocational Skills

While in most cases, crowdfunding for education is for formal undergraduate or graduate school funding, it can also help a person gain specific experience or skills for their job, even if there is no formal degree after that education and training. Examples of these education crowdfunding opportunities include paying a stipend during an otherwise non-paying internship or paying for specific training or retraining courses. These skill or training loans are also not very risky for the investor and are usually inexpensive.

Advantages and Disadvantages of Education Crowdfunding

So, what should you expect if you pursue crowdfunding for education? Here are some advantages and disadvantages of education crowdfunding.

Disadvantages of crowdfunding for education

First, be aware that this will be a bit more work. Of course, the added payoff for crowdfunding for education will make it worthwhile. Still, in the short-term, the application process will be more intensive and is, therefore, a short-term disadvantage. While traditional student loans only require you to prove creditworthiness and college acceptance (or for public loans only the latter), crowdfunding student loans will need you to confirm that you will likely turn your education into later occupational success.

You may be asked for a bio, a detailed account of how you plan to use your education, and maybe even some samples. The other disadvantages of education crowdfunding for the student include potential differences in interest rates, non-deferment of interest while you are in school, and the need to keep the crowd updated about your progress actively. The disadvantages of crowdfunding for education for the investor have to do with the potential for default and the fact that interest rates must be kept low as opposed to other forms of peer-to-peer lending.

Advantages of education crowdfunding

The advantages of crowdfunding for education are evident. First, you only pay them back as your income grows after graduation. Other benefits include allowing a prospective student to get funding where there is no traditional financing and less apparent, perhaps, the motivation that can be derived from knowing that a group of investors has confidence in you. For investors, crowdfunding student loans are a relatively safe (especially when aggregated) way to get a reasonable return from an investment that truly helps.

Traditional financing

Keep in mind when looking for crowdfunding for education that you should also look into more traditional options. Ensure you know what loans you qualify for, what the payback would be, and what potential tax advantages of each. Also, know details such as when the lenders will begin to charge interest and what possible programs are out there to lower interest. As exciting as education crowdfunding is, there may be other options for at least your initial funding that make more sense. Crowdfunding for education may only be the best choice if you are turned down for traditional educational financing or if the amount you qualify for is insufficient.

Applying for Education Crowdfunding

Suppose you are a prospective student looking into crowdfunding for education. It would be best to look for the best educational crowdfunding sites. Look for a site with funding for education investors, which can be challenging because education crowdfunding is relatively new to the marketplace.

There are many good sites available though, and starting with a simple search of something like “crowdfunding for college” may be helpful. Of course, you want to dig deeply into the sites you find – how many have students like yourself who tend to attract this funding successfully, and are there any independent reviews of your chosen sites anywhere?

Applying for crowdfunding education loans is fairly straightforward, but a lot of time is necessary. You may find that crowdfunding for education is a viable option for you for various advantages we discuss elsewhere. The main reasons why people turn to crowdfunding for education usually have to do with not qualifying for traditional school loans, though increasingly, students are seeing the advantages that can be had with education crowdfunding even if they do allow it because the crowd gives an even better package, or because traditional loans do not cover the entire cost.

Where to Find Crowdfunding for Education Investors

The best way to find crowdfunding for education investors is to look for a person or group who seems to specialize in your area or at least has recently funded your type of education. Some education crowdfunding investors will fund a variety of areas as long as the student appears to have great potential, but others specialize in specific areas or occupations.

There are two specific ways to find these types of funders:

1. Existing platforms that provide opportunities for many students or prospective students to apply for education crowdfunding and attract many potential investors who sift through the applications.

2. White-label crowdfunding for education, where you build your independent website and hope to drive traffic to it that will attract investors who may be interested.

Each method has drawbacks and advantages, but in either case, you must put significant effort into it.

Crowdfunding for Education Conclusion

Crowdfunding for education is more readily available than ever before. As secondary education costs rise and subsidized options with low rates increasingly do not cover the total cost, they may become a viable option for many. That said, as you can see from the above, the process of getting crowdfunding for education is more involved and in many ways from more traditional loans, and you need to be fully prepared and fully understand the process.

We will likely see things expand in the coming years, and we will stay on top of innovations and ideas in education crowdfunding. If you are an investor, please contact us so we can connect you with opportunities.

The post Crowdfunding for Education first appeared on Performance Psychology Group, LLC.

We provide this brief guide to the pros and cons of crowdfunding, and of course, you can always contact us to talk about your specific project and how each of these areas would impact your plans. We never charge for an initial consultation, and most of our subsequent connection services are free.

Pros and Cons of Crowdfunding: Pros

We start our exploration of the crowdfunding pros and cons by going over the pros. Many shy away from the idea of crowdfunding for various reasons, many of which are not based on the reality of how valuable and effective this alternative form of funding can be. However, as with any new financial instrument and less regulated financing method, it is unsurprising to see that kind of hesitation and concern.

Crowdfunding Pros List

1. Crowdfunding can pay off. You can get money that truly moves the needle for your company or project and is well worth whatever debt or equity you give up.
2. Crowdfunding can fund something less traditional than bank loans will fund. “Personal loans” have fallen out of favor with banks, and those who do offer them charge very high rates and restrictive terms. Even if you do qualify, you may find that traditional personal loans are too difficult to get.
3. Crowdfunding can be quite fun. You develop a relationship with the crowd or the peer who gave you the investment, and it can be rewarding to have people genuinely interested in your project or your idea. Usually, you and your project have been specifically chosen; therefore, there may be more genuine interest than you’d find with a bank loan.
4. Crowdfunding sites can be fun to browse to see what else is being funded and what else is out there. You can feel a part of a community of people pursuing crowdsourcing and see what others are being funded for. We hope that many who receive crowdfunding become investors after they are successful.

Crowdfunding may not be for every purpose and every investor, but the advantages are enough to make this kind of funding quite profitable for the crowd and also quite helpful to the person. StartupNation provides more detail about the advantages of crowdfunding.

Pros and Cons of Crowdfunding: Cons

Crowdfunding has many advantages but is not perfect or would be more mainstream and popular. So, as a comprehensive, balanced, and independent site, we also want to cover the disadvantages as we explore the pros and cons of crowdfunding. The main crowdfunding negatives you could run into include the following factors.

Crowdfunding Cons List

1. The investor could decide to stop paying out the crowdfunding money as promised. Check the small print in the contract, and you’ll see that there are likely ways that the lender can stop paying for sure, sometimes quite loose, circumstances.
2. The crowdfunder could reject your request for the next stage of funding. There is often a lot of leeway built into crowdfunding agreements because you have to continue to justify both your need and the financial potential of your project.
3. Your situation changes, and your project gets delayed or does not go smoothly. Again, with traditional loans, the money is likely already in the bank, and in some cases, the bank does not care if your project does not finish – they loaned you the money on your creditworthiness and built risk into the interest rate. With crowdfunding, your investors may be much more sensitive to the possibility that you will not finish on time.
4. You want to change some aspects of your project, but in some cases, those behind your crowdfunding can reject your request for modification. With a traditional bank loan, as mentioned above, you will get the money almost no matter what, and as long as you spend it on its generally intended purpose, you will often get no argument from the lender.

These are the main crowdfunding negatives. As you can see, they may or may not be enough to dissuade you from going the crowdfunding route or overcome the advantages.

Fox Business goes over some disadvantages of crowdfunding.

Pros and Cons of Crowdfunding: Both

The pros and cons of crowdfunding are often quite straightforward. However, sometimes, whether or not to join the crowd and invest in crowdfunding or try to attract crowdfunding is not clear.   Some factors affect the crowdsourcing pros and cons.

Pros and Cons of Crowdfunding: How the money is dispersed

Crowdfunding opens the door to creative ways that funders can get their money to the person who needs it. Unlike traditional funding sources, crowdfunding may have funds come in parts decided by ongoing milestones, specific successes, or periods that relate to the project. You may not get all the funds you need upfront, but on the other hand, some variability in how much you earn – perhaps in a good way – might be built-in. With traditional funding, you know exactly when you will get your money, usually upfront.

Pros and Cons of Crowdfunding: Information

With traditional loans for schools or small businesses, you are all set and usually approved initially. However, you may need to provide information about your progress with crowdfunding. This is not necessarily a bad thing for everyone, though, since it can make the crowdfunding experience feel more personal and rewarding, and it can also help lead to funding for the next step in your journey. Even the money you get upfront can require substantial information so that the crowdfunding investor can decide how likely you are to pay the loan back under the terms offered.

Building a Supportive Crowd

Using crowdfunding to build a large group of people who support and are excited about your project can be very good. Engaging these people can lead to free marketing and PR as they use word-of-mouth, including social media, to promote your project. However, this also may mean that you have a large group of investors who may have questions, want to give feedback, and press you to meet each of your timeline goals. That can sometimes feel overwhelming and even intrusive. Building a supportive crowd is mostly a good thing, but we list it in this “pros and cons of crowdfunding: both” section because there are some drawbacks.

Our Work

Crowdfunding has advantages and disadvantages that must be considered before you put your product or company out there. And in some cases, some factors may fall into both categories or be hard to assess. You need to know how to proactively address the advantages and disadvantages of crowdfunding to maximize the former and minimize the latter. Choosing the best platform, designing a great pitch, and carefully determining the terms are all essential steps, and our services are available for all of them.

We hope that this brief overview of the pros and cons of crowdfunding was helpful, and we invite you to contact us to discuss this topic in relation to your specific project further and see whether our investor and platform connection services are right for you.

The post Pros and Cons of Crowdfunding first appeared on Performance Psychology Group, LLC.

Crowdfunding Investments in Personal Fundraising

The most common crowdfunding investments involve independent websites set up to run a fundraising campaign. Of course, there are websites through which you can run your fundraising campaign, but in some cases, people want to go it alone. Perhaps they want the greater flexibility of setting up their independent website or ensure complete creative flexibility regarding how their pitch is presented. For one reason or another, they do not want to compete with other peer-to-peer lending or crowdfunding investment pitches and feel they can attract traffic and interest on their own. Enter personal fundraising websites.

What is a Personal Fundraising Website?

A personal fundraising website is exactly as it sounds: a site that you build yourself designed to raise charitable money for a mission-driven purpose. The word “personal” often suggests that an individual or family (as opposed to a larger group or business) is behind the pitch, and “fundraising” suggests that the goal is to raise money for a charitable purpose that does not have to be paid back.

Personal fundraising websites are a cousin of “white label crowdfunding,” the latter being peer-to-peer pitches made through independent websites, but are more traditional types of crowdfunding investments, including equity crowdfunding or other methods requiring payback. In both cases, you don’t necessarily have to start from scratch – Just because the pitch will not be made at an aggregate website, that does not mean that no products are available that help you get your start – pre-packaged websites and other crowdfunding platforms you can buy.

The post Crowdfunding Investments: Latest Innovations first appeared on Performance Psychology Group, LLC.