Funding Developments with Crowdsourcing

This article from The Atlantic Cities is about using crowdsourcing to fund real estate development. Normally you have to use "certified investors" to fund a development. Banks and other types of "certified investors" are often hesitant to invest in anything except sprawl-type developments, which they feel are safer investments than smaller, mixed-use developments.

Until recently some pretty arcane laws prohibited small-time investors who would be more likely to invest in smaller neighborhood-scale developments, often in their own neighborhoods (These laws were put in place with good intentions, though--to discourage people from taking advantage of one another). Two brothers, Ben and Dan Miller, figured out how to navigate these laws to redevelop a small boarded-up old building in their Washington, DC, neighborhood. The company they set up, Fundrise, seems to be going the way of a tech startup in that it gives people a bonafide legal means of making small investments in small buildings and their future businesses.

New laws passed recently by Congress have eased up restrictions so people can now invest up to $2000 per year on this type of small-time investment. This could have some pretty big implications for the future of development. There could be reduced reliance on distant investors with no personal connection to the community where the development could occur. This could also provide more employment opportunities for designers by providing them with another way to get into the development business (which I think could use plenty more designers). It also would get local money into development of local businesses. People would know that they're contributing to the success of their community, and the investors would likely already have some sort of personal connection with the developer (hopefully a positive one).

This is something I'll definitely keep my eye on and see how it evolves in the near future.

http://www.theatlanticcities.com/neighborhoods/2012/11/real-estate-deal-could-change-future-everything/3897/