WASHINGTON, DC—Overly complex, convoluted offerings that can't be explained online typically aren't a fit for real estate crowdfunding. That is according to locally-based real estate crowdfunding platform, Fundrise co-founder Dan Miller, who recently spoke with GlobeSt.com on the subject.
GlobeSt.com: Fundrise has crowdfunded over 30 offerings on its platform. What have you learned about the preferences of individual investors?
Dan Miller: We've done a range of offerings that vary in investment type, asset class, location, etc., and, along the way, we've learned a lot about the investment preferences of the individual investor. The key takeaway is simplicity. Investors want investments that don't need hours of additional investor analysis and due diligence, they want deals that make sense. Overly complex, convoluted offerings that can't be explained online typically aren't a fit for real estate crowdfunding.
We've also noticed that investors are often interested in offerings in the states or regions that they live in. We recently had an investor tell us that an offering was located on the same street as his grandparents' house. He was familiar with the community and understood its tremendous growth potential, so the investment was a no-brainer.
GlobeSt.com: Why are developers moving in droves to crowdfunding?
Miller: Sponsors have started to see that crowdfunding can be simpler, faster, more flexible, and, in some cases, even cheaper than traditional capital sources. But, beyond this competitive advantage, there are a host of other benefits that developers receive that are unique to crowd-based fundraising. Real estate crowdfunding allows developers to activate a new stakeholder group and generate broad support for a project, which is useful when moving a project forward. Additionally, crowdfunding drives invaluable marketing for a developer, particularly those that are developing branded assets or looking to develop a new base of investors.
GlobeSt.com: You have a background in real estate development and investment. In your opinion, what are the best US markets right now?
Miller: We're seeing lots of opportunities for sub $20-million deals in emerging neighborhoods, where the demand is for creative mixed-use development driven by the 25- to 40-year-old age group. Such neighborhoods include Bushwick and Crown Heights in Brooklyn, H Street NE in Washington, D.C., Downtown & Lincoln Heights in L.A., Wynwood in Miami, Pilsen in Chicago and Poncey-Highland in Atlanta. Outside of the US, I saw similar urban regeneration in Shoreditch and Hackney Wick neighborhoods on a recent trip to London.
I'm also fascinated with Detroit, having made several trips in the past year as we plan our first few projects there. Though there are open questions around restructuring of the city's finances, there is incredibly vibrant development happening in sub-markets such as Corktown, Midtown, and News Center, supported by local demand and business. Investors in Detroit will need patience and low leverage to ride the cycles, but I'm a believer in the city re-emerging from bankruptcy and building itself through both grassroots and large-scale development.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
