Fundrise was founded in 2010 and until now, has allowed qualified investors to invest in only commercial real estate. The company recently completed a Series A funding round that brought in around $38M (earning them the highest financial backing in real estate crowdfunding). Fundrise recently announced that they are launching a new arm of their company that creates investments opportunities for purchasing and rehabilitating single family homes.
The plan is to deploy approximately $10 million per month to real estate sponsors in top markets, who have a proven track record for success in the single-family home purchase and rehab business. Ben Miller, Fundrise’s co-founder and CEO, has said:
“Our successful Series A funding has allowed us to create a new product line dedicated to funding high-quality single-family home projects. We believe that by pre-funding these deals, we can compete with traditional hard money sources while providing more flexible capital via the crowd.”
This expansion in their service comes after the company has had some success with residential projects, “including funding a $1 million investment in a luxury waterfront residence in the Hamptons.” The recent success of that project is part of what prompted the shift into residential real estate for Fundrise. According to an article by The Huffington Post:
“Sixty-four (64) accredited investors participated in the transaction, and they are expecting a gross annual return of 10.5 percent when the property which is close to completion is sold. The project is being undertaken by Chatham Development Company, the largest developer on Long Island … This project made history in that it showed that the crowd can access luxury properties not just residential or commercial properties in order to have greater returns.”
Fundrise is driven by the feeling that its network of 35,000 experienced investors (including Guggenheim Partners, Renren Inc. and Silverstein Properties CEO Marty Burger) can help make access to funding easier and cheaper than other alternatives.
Dan Miller, the company’s co-founder and president, stated that more changes are coming: “In a few months, we hope to be able to provide ongoing credit lines to a dozen or more groups across the country.” All of this will help keep the company on top of the real estate crowdfunding market and help them with their goal to connect real estate companies with investors without the usual, costly middlemen.
Another one of the company’s big focuses is making real estate equity crowdfunding more accessible to the average person, not just accredited investors. The company website’s About page encourages this, saying:
“You don’t have to wait for the JOBS Act. Fundrise has filed local public offerings with the SEC and state regulators to allow all local residents—not just accredited investors—to invest for as little as $100.”
By doing this, the company hopes to empower local citizens to participate in transforming their neighborhoods. With the success they have had so far they have already proven a lot of people who didn’t believe in them wrong, and with more changes to come their platform still has not finished growing.
