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Real estate development doesn’t happen without investors. And to invest, they must be “accredited” — that is, big banks, Wall Streeters or the just plain wealthy. This almost always leaves out the people actually living in the communities where real estate is developed, people likely to have a deeper connection to whatever it is that gets built.
Through a new model called Fundrise, these local community members can invest as little as $100 in real estate projects in their neighborhood. Created by Washington, D.C. developers, Fundrise uses crowd equity and vested neighborhood funders to bring about real estate projects that communities want and need. It’s a dramatic departure from the existing model, and took nearly two years to bring from idea to reality. After significant effort, Fundrise’s creators got the Securities and Exchange Commission to qualify their first public offering in 2012, which drew 175 investors and more than $325,000. Fundrise has already opened a handful of other offerings, and each has met its funding goal. The concept seems to be working, and it’s making real estate development into a truly community-based endeavor.
Nate Berg is a writer and journalist covering cities, architecture and urban planning. Nate’s work has been published in a wide variety of publications, including the New York Times, NPR, Wired, Metropolis, Fast Company, Dwell, Architect, the Christian Science Monitor, LA Weekly and many others. He is a former staff writer at The Atlantic Cities and was previously an assistant editor at Planetizen.
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