New Style Of Real Estate Investment Comes To Park Slope

The concept of crowdfunding has become a well-known way in which to have a large amount of investors raise funds for an artistic project, cause, or invention. Kickstarter and Indiegogo are common examples.

How would the idea of crowdfunding translate into real estate investment?

Fundrise, which refers to itself as “the country’s first platform for online real estate investment,” provides the opportunity for investors without a tremendous amount of liquidity to become involved in the real estate market in their own communities.

Companies such as Kickstarter and Indiegogo do not provide investors with an opportunity to earn money on their investment — which makes Fundrise a different type of crowdfunding concept.

In this crowdfunding instance, 306 7th Street (between 4th and 5th Avenues) is a three-story building that has been bought for $3.2 million. Fundrise — which is based in Washington, D.C. — will partner with Brooklyn-based JBS Project Management to oversee the repositioning of the building.

According to Dan Miller, co-founder and president of Fundrise, the repositioning of this building will include “a gut renovation to create three full-floor rental apartments.”

“Why don’t we let individuals locally invest?” says Miller. “These investors could not invest in a traditional manner. That’s what excites us most.”

Fundrise pre-funded the $2 million investment in order to begin the process. That’s when the crowdfunding process begins. In the case of 306 7th Avenue, more than half of that $2 million raised was from New Yorkers. Miller tells us that “an individual who invested $500,000 lives about a mile from the building.”

The Fundrise investors are projected to receive a gross annual return of 11% paid current quarterly over an 18-month term.

Miller is optimistic about crowdfunding opening up even more opportunities for individuals. He tells us that laws passed as part of the JOBS Act will make this process easier. Although the laws have not been enacted just yet, the act will “drastically reduce the effort and time to sell a private investment to the general public.”

“The neighborhoods within Brooklyn are some of the strongest investments in the country.”

Miller also hopes that Fundrise’s crowdfunding concept will become a common way in which to approach the affordable housing markets as well.