Real estate crowdfunding has been steadily increasing in popularity. An article by the Huffington Post says that, “It is estimated that funds raised through real estate crowdfunding currently accounts for $135 million of the total $13 trillion real estate market.” This number is sure to grow when Title III previsions of the JOBS Act are passed in the US. This will make it easier for the public to invest in real estate projects (which they usually wouldn’t have the opportunity to do).
The presence of big institutional investors in real estate crowdfunding is helping to bring more credibility to the practice. One real estate crowdfunding platform, Fundrise, has been doing well attracting established investors, such as Renren Inc. and Silverstein Properties.
Recently, Fundrise helped Brooklyn Standard Properties raise $250,000 from just 10 investors in 24 days. The projected gross annual return is 10 percent, to be paid back over a period of 24 months. These funds will be going toward the renovation of 136 North 8th Street in Williamsburg, Brooklyn:
“The developer Brooklyn Standard Properties (BSP) purchased the property in October and intends to renovate the four-unit, four-story rental apartment building located near the Bedford Avenue L station. BSP plans to turn the units into four three-bedroom apartments, duplex the first floor with the basement, and loft the fourth floor unit to increase rentable square footage. The raise will also be used to improve fixtures and finishes in the building, and renovate common areas including hallways and entrances.”
Fundrise has raised a combined total of $580,000 for Brooklyn Standard Properties, “In 2014, the platform funded $255,000 for a multifamily rehab in Greenpoint, and $325,000 for a multifamily rehab in Prospect Heights for the developer.” This is the platform’s third offering on behalf of the company, showing that their success had led them back to Fundrise for more projects.
The Huffington Post article suggests that Fundrise:
“[I]s leading the way in bringing in institutional capital … based in Washington, DC, is not only democratizing real estate investing by allowing $100 investments from the crowd but they are also getting the big boys to put their stake on their platform and participate in the industry.”
Their focus on transparency and letting communities participate in their own real estate development has made them one of the most popular platforms of its kind. Their platform has made the list of CrowdCrux’s top real estate crowdfunding platforms.
Earlier this year Fundrise reached $10 million in investor funding, with over $38 million in total deals done through the site. In an article for Times Realty News, Fundrise Co-Founder Daniel Miller said, “We are now raising roughly $1 million a week. That’s $25,000 per hour.” As real estate crowdfunding gains more traction, these numbers should continue to rise.
