31 Million US dollars was just raised by Fundrise, a real estate commercial website. From the article “Fundrise, a Crowdfunding Website, Raises $31 Million” by Amy Cortese, The New York Times, the money was totally raised by private benefactors through Crowdfunding.
Crowdfunding is the collection of finance to fund a singular initiative, in this case, the purchasing of property. This concept was only just legalized in 2012 with the JOBS act, but the brothers who founded Fundrise, Benjamin and Daniel Miller, had already been developing the idea since 2010. Currently Fundrise only operates in the US but has grown rapidly from a small company in Washington to operating nationwide.
“We found that there was a problem in real estate, that the financial institutions that are the normal investors in real estate don’t really understand the places their investing in; aren’t really connected to them. So our idea was, lets try and make it possible to make the community our partner; and then we can actually deal with people that are actually the stakeholders” -Benjamin Miller, Co-Founder
So what Fundrise does is “cut out the middleman” when investing in property, this then makes it easier for people and companies to directly invest in real estate. Fundrise does this by bringing together groups of people from the same neighborhood or companies that would be interested in investment, so they can all collectively invest in local property. The investment then goes straight into the development of the building and therefore letting the individuals who own shares to have a say in what happens to the building while also making a profit off the rent and appreciation of the real estate.
But has this been effective? Fundrise was a small firm operating only on small-scale until recently where Fundrise gained funding from a group of prominent technology, real estate and other backers; 31 million USD was made in the first round of funding. Companies like Renren, Silverstein and the Ackman-Ziff Real estate group were all partaking in the funding.
The above article is an abstract from The New York Times, May 27 2014 and with additional details from the Fundrise website. Let us know your comments. Visit our website to find out more on our upcoming real estate courses. Contact us to find out more.
