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Investing in real estate is a time-tested method of generating passive income. Previously reserved for authorized investors, crowdfunding in the real estate sector has now become accessible to non-authorized investors. The entry restrictions for small investors with yearly income and net worth surpassing $200K and $1M, respectively, have been lowered thanks to the amended JOBS Act.
As a result, financial institutions across the globe reconsidered their regulations in favor of unaccredited investors. And people flocked to participate in crowdfunding real estate projects. Platforms for real estate crowdfunding influenced market expansion and made the investments widely available. For this reason, it might be a great idea for your business to build a real estate crowdfunding platform.
In this article, we will discuss the future of real estate crowdfunding. We will also explain how to start a platform based on its type, core features, tech stack, and the cost of real estate crowdfunding platform development. Finally, we will demonstrate the Softermii experience in real estate app development and share some examples of our works in this field: Rently, Real Estate Association, and RadPad.
What is the Future of Real Estate Crowdfunding
Real estate has historically performed better than almost any other passive income. The real estate investing industry now includes over 5,000 companies. And among these, real estate crowdfunding platforms are the most cost-effective alternative for small businesses and individual investors.
According to a recent report by Research and Markets, the size of the global real estate crowdfunding market is anticipated to reach USD 250.62 billion by 2030. Two main factors are promoting the segment's upcoming growth:
- The public's increasing awareness of crowdfunding platforms
- The growing number of favorable regulations for investing in crowdfunding
The most crucial aspect that will likely fuel business expansion internationally is the adoption of blockchain technology in crowdfunding platforms. Blockchain helps create smart contracts and tokenization, which makes transactions faster and more straightforward. It’s a decentralized network for listing, regulating, financing, and managing real estate built on blockchain technology.
Differences in Starting a Platform Depending on the Type
When deciding to make a real estate crowdfunding platform, you will need to choose between two optimal business models. They determine how and under what conditions your website or app will receive money from investors. There are two main models to consider:
- Donation-based platforms
- Reward-based platforms
When selecting one of these crowdfunding app development contribution models, consider your platform's specifics and opt for the one that fits your category best.
In this type of crowdfunding platform, donors contribute without anticipating a financial reward. That is why it perfectly suits philanthropic enterprises. Some well-known examples of this model are Crowdrise and MightyCause. It’s also worth mentioning Patreon and Kickstarter, which can also adopt donation-based crowdfunding.
The donation-based strategy can be an excellent choice if you want to create real estate crowdfunding website.
In this crowdfunding model, the investors receive a predetermined reward. It’s usually associated with a crowdfunding company's goods or services, such as gifts or souvenirs. However, the reward is often a service or product that needs funding within a crowdfunding campaign. Also, these could be bonuses for those who donate more than usual. In particular, Fundable has adapted this model to its business needs.
With such a model, fundraisers receive funding for their ideas in exchange for their goods or services. The reward-based approach gives creators considerable freedom when creating a crowdfunding platform. Such platforms help start-ups and small enterprises get their ideas off the ground.
Core Features for a Real Estate Crowdfunding Platform
Now, it’s time to reveal how to start a real estate crowdfunding platform. We have examined the leading real estate solutions and compiled the seven essential features that are needed to create real estate crowdfunding portal.
1. Listing of Projects
Listings of projects represent the registered properties available for investments. Each listing on a page should include the following elements:
- A brief description of the property
- A photo
- The property’s location
- The developer’s name
- The platform's rating
- The projected return
- The anticipated holding duration
- The “Add to favorites” option
When creating a real estate crowdfunding website, ensure it allows investors and property owners to register their accounts. For example, you can provide a rapid sign-up experience or a detailed registration with a simple investment process. You may also add a two-factor authentication option and enable login to your platform through Google or Facebook.
3. Requirements for Investors
Unaccredited investors make up the majority of your target market. So it’s a good idea to create specific requirements for your clients striving to participate in real estate transactions. You can add this information to FAQs or create a new page. Also, it might be helpful to explain the common laws and regulations governing the real estate sector and business dealings with regular investors.
4. Investor Profiles
Your platform needs an admin panel for investors. Thus, your customers will need a digital wallet linked to their bank accounts to make transactions. You can also include some data and analytics, such as graphs showing the overall performance of investments or charts illustrating portfolio diversification.
5. Payment Processing
It’s crucial to link your platform with a banking system or payment gateway to facilitate financial transactions. The latter is a safe connection between a bank account and the investor's credit card. They authenticate the client's information, ensure sufficient funding for the transaction, and securely communicate sensitive data.
6. AML/KYC Checks
In the field of fundraising, customer due diligence (CDD) inspections are essential. Crowdfunding platforms should focus on consumer identification and verification of their revenue type and source. Companies that offer crowdfunding services to non-accredited investors exhibit AML/KYC control by asking to submit some personal information (SSN, annual income and net worth, bank account number, etc.)
7. Customer Support
If you’re always ready to give a hand and show that you care, your customers will appreciate it. Your support team must be accessible at least during regular business hours since your clients may need to overcome some critical issues at any time. Make sure your website's contact forms are functional and make it simple for people to get in touch with you. Also, it’s worth adding a live chat option for pressing questions and the email support option if your agents are currently unavailable.
Tech Stack for Creating a Real Estate Crowdfunding Platform
The tech stack for real estate crowdfunding platforms differs depending on the solution’s type, functionality, and budget. Here are the technologies we used to develop real estate solutions at Softermii.
- Swift. It’s a multi-paradigm compiled programming language designed by Apple to coexist with Objective C and be resilient to buggy code. We use Swift for iOS development.
- Google Maps & Places. With map-based search tools and visualization options, investors learn about property locations and neighborhoods. We use it to give investors access to crucial information through Neighborhood Discovery and Property Search.
- WordPress. Many real estate platforms use WordPress to showcase listings and attract new customers. Numerous WordPress real estate plugins allow you to create forms, customize listings, add filterable searches, create virtual tours, and more.
- Firebase. It’s an app development platform for backend-as-a-service (BaaS). It offers hosted backend services like a real-time database, cloud storage, authentication, crash reporting, machine learning, remote setup, and hosting for your static files.
- MVC. The MVC pattern enables the construction of straightforward cross-platform apps with simple navigation logic, uncomplicated content, a largely uniform UI design, and a simple interface. It can carry out the “loaded -> shown" type of tasks quickly and easily.
- Java for Android. Java protects native code against memory leaks. Every Java platform compiles various functionalities in Android development.
- Stripe. With support for most bank cards worldwide, Stripe is a global platform for safe online payments. No wonder it’s one of the most popular options for businesses of all sizes.
You can learn more about the top programming languages and frameworks we use for software development in our blog.
Key Steps of the App Development Process
Defining a project scope is the first step in constructing a real estate crowdfunding platform. We create a user demographic and information architecture that emphasizes the user flow. It ensures a good indication of the screen sizes and feature sets.
Platforms for real estate crowdfunding typically involve lots of data, including calculators, investment dashboards, and details on numerous projects. If all this information is entered in one location, the applications may seem crowded and data-heavy. The solution is to create a simple design with an intuitive user flow.
During this phase, we deal with all engineering work for the future app. Entrepreneurs often collaborate with real estate software development firms to streamline this crucial step of the process. At this stage, we strengthen the platform, making decisions regarding APIs, functionality, and tech stack.
The next step is to launch the application on the Play Store and App Store once the development of a real estate investment platform is over. We also provide post-launch maintenance services to support and update the existing platform.
Real Estate Crowdfunding Platform Development Cost
The chosen feature set, technologies, team size, and, most importantly, the location of the app development agency affect the price of crowdfunding platform development for real estate. It is hardly possible to clarify the full complexity of the project. However, based on the characteristics we stated in the post, the cost of such a platform could range from $120,000 to $200,000.
If you engage a team from the US or the UK, the average cost of development per hour varies from $120-$150. In contrast, the price of such services in Eastern Europe is $80-$100.
Besides, it’s important to note that a real estate investing platform usually has a team of people working behind it.
- Two developers
- A quality assurance (QA) specialist
- A business analyst
- A UI/UX designer
Softermii can handle the entire software development lifecycle, from the discovery stage to quality assurance. We empower our specialized real estate software solutions with many advanced technologies, including Artificial intelligence (AI), the Internet of Things (IoT), videoconferencing engines, AR, and VR. You can become the market leader or a game-changer with these characteristics. Let’s look at some of our real estate solution cases.
Rently proposes a rental showing process that is entirely IoT-powered. The Smart Lockbox feature makes visiting properties easier without a landlord's presence.
We needed to improve the usability and some features of the app's initial release. The user-friendly layout and slick performance of the software were our main challenges. Our business analyst dived into more than 20 apps to learn about customer needs and generate use case ideas before presenting the app concept to designers.
The app had to be user-friendly and contain a lot of information. After finishing the design, the development team had to stick to a strict schedule. Fortunately, we managed to provide our clients with a robust real estate application.
The mobile app for realtors enabled easy negotiations for the French Real Estate Association agents. It streamlined collaboration among real estate sector specialists, addressing the lack of openness and communication between professionals in the real estate industry.
The client asked us to create an app for real estate brokers that would make it easier for them to close transactions with potential clients. The real estate agent application had to provide field workers and clients with up-to-date information. The project aimed to resolve problems that adversely affected the capacity to close deals.
With expertise in creating apps for real estate brokers, Softermii created a mobile app tailored to the unique requirements of the French real estate market. Compared to their rivals who are not utilizing the app, the end-users of the app we developed have a clear edge.
Radpad is a full-featured platform for landlords and renters. It included more than a million homes, condominiums, and apartments from Los Angeles to New York City in a single app. We made the process as simple and hassle-free as in an online clothing store.
The client had a vision of how long it would take to produce their product. However, the usability and some features of the app's initial release needed to be improved. Our main challenges were to create a user-friendly design and improve the app's speed.
The business analyst created use cases for a designer and the software architecture for developers. Despite millions of properties, our designer came up with a simple and intuitive user interface. The app's development team managed to meet stringent timelines.
Thanks to our prior knowledge and sizable internal database, we completed the development process twice as quickly as our competitors.
Recent regulations in favor of non-authorized investors have cut the entry barriers for small investors with yearly income. This allowed common people to access the real estate crowdfunding market, which was only open to authorized investors. As a result, real estate crowdfunding platforms have influenced market growth and increased access to real estate investments.
Softtermii has a proven experience in real estate app development. Our solutions are powered by artificial intelligence, IoT, videoconferencing engines, and AR/VR. These innovative features can help you take the market by storm and revolutionize the game.
Contact us to consult deeper on the topic with our expert.
Frequently Asked Questions
What benefits can be expected from the launch of a real estate crowdfunding platform?
Platforms for real estate crowdfunding influenced market expansion and made real estate investments widely available. According to trends analysis, a real estate crowdfunding business is one of the most enticing company ideas for 2023 based on returns on investments.
What difficulties may arise in the development of the real estate crowdfunding site?
Before launching your crowdfunding site, you should get legal counsel. Such operations frequently call for registration with or a license with a governmental body, like the SEC in the US or the FCA in the UK.
How long does it take to build real estate crowdfunding platform?
The duration of real estate crowdfunding platform development depends on the project scope, desired functionality, and the number of team members involved. Building a custom real estate platform is usually a long-term project as it requires covering many development stages and ensuring consistent management.
How to choose a real estate crowdfunding platform development company?
Once you've decided on your business strategy and requirements for your future crowdfunding platform, you can start looking for crowdfunding platform development companies. Clutch, G2Crowd, and GoodFirms are some of the most reliable providers on the market.
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