Our founder and director, John Friis recently gave a talk at Simple Crowdfunding‘s training event, where he talked about the benefits of using Simple Crowdfunding for property development.
In addition to this, John shared his top ten tips for property developers, which he describes below.
Top Ten Tips for Property Developers
1. Secure the land/ property with an option or exclusivity agreement or by having exchanged contracts with the vendor.
This is self-explanatory. At the very least, the vendor/ their agent needs to be fully informed of what you are doing and how long the process is likely to take. It would be highly embarrassing (not to mention costly) for the vendor to pull out before both parties are committed.
2. Images (particularly external CGI) are essential
Delight and interest your audience from the very start. The old cliché about a picture being worth a thousand words definitely applies here.
3. Engage your senior debt provider
Even though most debt providers are now au fait with the idea of the equity raise being provided through crowdfunding, make sure they are aware from the very start.
4. Engage your corporate solicitor
Many corporate solicitors will not have experience creating a bespoke shareholders agreement for a consortium of shareholders investing through an online platform. A good solicitor will manage to put one together but bear in mind that it may take more time that you expect it to.
5. Allow yourself and your investors enough time
Give yourself and your investors enough time to navigate through the entire process, the various stages of which are as follows:
- Providing documentation and information about your development to Simple Crowdfunding.
- Marketing your project to the investors on the platform. This may involve webinars, videos, social media or blog posts, Q+As and almost certainly a combination of most or all of these.
- Allow for the fact that once the project goes ‘live’ on the platform, it may take time to raise the required total amount.
- Allow your investors enough time to confirm the amount they are each investing, to sign the documentation, and to transfer the funds.
- Once the funds have been raised, allow yourself enough time to complete your debt lender’s loan documentation in order to complete your purchase of the property.
6. Aim to raise more money than you think you require
If your project is a good one and you know your target investor audience, prepare to be pleasantly surprised by how responsive they will be and how quickly you will raise the money you need.
7. Engage and be open and honest with your investors
Communication is vital. I cannot stress this enough. The more videos, webinars, monthly written or video updates you provide, the more transparent you are with your investors, and the more site visits you conduct, the more your investors will appreciate it. Remember, developers. Your investors are as much a part of the project as you are. Without them, there would be no project.
8. Learn as you earn
The best and surest way to get an idea of what the process involves is to invest in someone else’s project. Get copies of their documentation, learn how they market their deal and how they interact with their investors. Take the good points onboard, discard the less-than-optimal, and you’ll pick up all the necessary knowledge to do it yourself.
9. Be grateful to the platform for what they do
I cannot speak highly enough about how easy Simple Crowdfunding makes the entire process. 5 stars all the way!
10. Enjoy building your brand
A great website can help with this. Find out how to start a blog for your property development business here.
Remember, it’s not the destination, it’s the journey.