The Real Deal New York

Crowdfunding brings real estate investment to the people

Startups pursue strategy to improve transparency, generate building buzz

February 19, 2014 03:10PM

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A number of new real estate startups are bypassing traditional banks and professional investors and instead taking to crowdfunding platforms to finance new projects.

The specifics vary from firm to firm, but all aim to use crowdfunding to make real estate investment more transparent and to generate buzz for their buildings. The funding format is new on the real estate front, as the Securities and Exchange Commission lifted a ban on private companies investing unregistered products in the fall of 2013. “Accredited” investors, or households with a head earning an annual income of $200,000 or a net worth of at least $1 million, may now join the fray — a specification the SEC is also expected to lift at some point, reports show.

“In the wealth management world there are only two big assets: bonds and stock, and this is the creation of a totally new asset class,” Rodrigo Nino, founder and chief executive officer of Prodigy Network, which is crowdfunding its current project at 17 John Street, told DNAinfo. “People have the opportunity to invest in something that wasn’t available before.”

Other crowdfunded projects include an apartment building at 151 Dupont Street in Greenpoint, Brooklyn, sourced by startup Fundrise, which has so far raised $225,000 of its $700,000 goal via accredited investors. On Fundrise’s next project, a boutique hotel in Gowanus, the company is aiming to raise capital from unaccredited investors with shares starting as low as $100, co-founder Daniel Miller told DNAinfo.

“We’re very focused on allowing everybody to invest in real estate,” his brother, also a co-founder, Ben Miller, told DNAinfo. “When you walk around your neighborhood, who owns the buildings, who’s profiting from it? Not you, and that’s not how it should be.” [DNAinfo] — Julie Strickland

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