Sponsor Phase 2 - Crowdfunding 101 (How to or one big idea)

How To List Your Deal Online With A Crowdfunding Platform

Brandon Banks
August 25, 2021
How To List Your Deal Online With A Crowdfunding Platform

How To List Your Deal Online With A Crowdfunding Platform

Many sponsors want to know what it’s like to raise funds through a crowdfunding company so we decided to share our process. You can see what’s required on your part and what tasks our platform automates for you.

Over the years, our technology has matured and made the crowdfunding process more efficient for sponsors. Our goal is to automate tasks where possible and free up sponsors to create value for their investors.

At RealCrowd, accredited investors know us for having a unique marketplace where they can find high quality, experienced real estate sponsors to review investment opportunities with.

Sponsors looking to promote their offering on the RealCrowd marketplace must first be vetted and approved. Upon approval, you are granted access to our marketplace and are invited to follow these steps to onboard and launch your offering:

Build Your Offering Page

The offering page is your own personal website within our marketplace that presents your investment opportunity to potential investors. Each page is tailored to your unique business and offering.

Your offering page highlights the important keys to your deal in a simple format. We find that investors place just as much emphasis on information about sponsors as they do on the opportunity presented. Your offering page is your first chance to make a lasting impression.

We have divided the information into the following categories.

Sponsor Information 

We ask sponsors to submit their company name, logo, number of employees, founding year, address, phone number, email, and website.

A few paragraphs that describes your company’s history and investment focus will be used in the “About the Sponsor” section on your offering page.

We also ask for names of your Principals, their years of experience, and photos. You should also provide a point of contact for investors.

Additional information includes:

The property type you are focusing on, whether it’s multifamily, retail, self storage, industrial, office, hotel, SFR, senior housing, or student housing.Target markets and/or regions for investment.The type of investor you focus on, whether it’s individual investors, institutional, family office, internal, or foreign capital.Asset information including value and number of assets currently under management, and those exited historically.The portfolio loan-to-value ratio (%).

Investors place a heavy emphasis on the experience level of a sponsor. They check for the following:

Historical project level average equity multiple for exited assets. This is not the promoted sponsor level returns but rather the total project level returns. Historical project level average IRR %. Again, for exited assets..Current and historical average annual cash returns (%) for the total project level returns.All this information is presented in your offering page to provide investors a quick glance of your experience level.

A simple way to highlight your vast experience in real estate.

Click here to view the detailed sponsor onboarding form containing all the questions and documentation required.

Offering Information

Pro Forma

Investors spend a considerable amount of time going through the numbers. Sponsors who provide in-depth analysis and information about their assets position themselves as transparent and well-prepared.

While we don’t require a pro forma to launch, a detailed Pro Forma (preferably in Excel) helps investors understand the offering.

Marketing Collateral

We suggest that your marketing collateral be made up of:

  • An Investment Summary
  • The Equity Offering Memorandum
  • A Financial Summary
  • Either a PPM or Investment Summary or Equity Offering Memorandum

You should also provide:

  • Any additional marketing collateral
  • All high resolution photos of the property - One main banner image and 8-10 images for the slideshow.

To build trust, investors want to see relevant proof in the form of testimonials from other investors, featured news articles, and photos of past deals. 

Offering Documents

Believe or not, investors will read through PPMs and other material to understand the inner workings of a deal. We ask sponsors for the following: 

  • LLC Operating Agreement(s)
  • Subscription Agreement/Investment Agreement

You can also control how you will raise and distribute funds by letting us know:

  • Minimum accepted investment amount
  • Maximum accepted investment amount
  • Commitment Increment
  • Whether international investors are accepted
  • Whether your offering is available for 1031 exchange
  • Whether it is an Acquisition or Recapitalization
  • Expected date that returns begin to accrue
  • Projected first distribution date
  • Distribution Frequency
  • Target Cash on Cash % (RealCrowd Investor Level)
  • Average Cash on Cash Return % over the hold period projected to be distributed to Investors
  • Target IRR % (RealCrowd Investor Level)
  • IRR % projected to be realized by Investors
  • Equity Multiple (RealCrowd Investor Level)
  • Equity multiple projected to be realized by Investors

Structure

You’ll be asked to provide a Distribution Structure Description. For example, 8% Preferred Returns with 70/30 split thereafter. You can also explain any catch-ups, multiple waterfall hurdles, and priorities of distributions.

Financial Terms

Sources and Uses

This is a list of the sources and uses for this investment. 

Sponsor Fees Description

We ask for a dollar amount or percentage for ALL fees retained by sponsorship throughout the duration of the investment. 

This includes property management if this service is in-house. If property management is performed by a third party, this fee is excluded.

Other examples of fees include:

  • Acquisition
  • Asset management
  • Disposition
  • Construction Management
  • Loan acquisition

We also ask that you specify if the fees are one-time or on-going. 

Property Management Fees Description

A description of how property management fees are charged at the property and if it will be managed internally or by a third party. 

If managed internally please explain what portion of fee is to offset hard costs incurred for property management.

Hold Period

Projected investment period in years. Provide either an exact number of years or a range of years. 

Property Information

Basic information includes:

  • The name of your offering
  • The property type (Multifamily, Office, Retail, Industrial, Self-storage, Hospitality, Senior Housing, Student Housing, etc.)
  • Asset type (Value-add, Core, Core-plus, Opportunistic, Development)
  • Financial structure (LP Equity, GP Equity, Non-Participating Preferred Equity)
  • Property Address
  • Total Purchase
  • PricePrice/SF or Price/Unit
  • Total Equity Amount

Other financial information includes:

  • Target Raise through RealCrowd
  • Target Raise for External Equity
  • Sponsor Equity — Cash equity invested by Sponsor (Co-Invest)
  • Senior Loan Amount

Finally, we ask you to let investors know the deadline to wire funds and the expected close date.

The offering onboarding forms are broken up into a few categories based on your offering type. Click on your offering type below to view the onboarding form:

Asset Onboarding Form

Fund Onboarding Form

Development Onboarding Form

Offering Marketing

Investment Description

1 to 2 paragraphs explaining the investment and the opportunity to create value.

Key Points regarding this investment

4-8 bullet points that highlight unique aspects of the property and/or investment opportunity.

Location Description

1 paragraph highlighting the benefits of the property's location.

The offering marketing forms are broken up into Asset and Fund. Click on your offering type below to view the marketing form:

Asset Marketing Form

Fund Marketing Form

Once these three onboarding forms have been submitted, along with all the final version of the supporting documents, we will begin the build out of your offering page. The completed offering page will then be sent to our Diligence team for review prior to launch!

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