My brother Ben and I started Fundrise in 2010 with one goal: give everyone the opportunity to invest in high-yielding, quality real estate. At the time, only high net-worth investors were allowed to invest (usually with minimums of $50K!), while everyone else was excluded.
Fast forward to 2014 and things have changed. Real estate crowdfunding has been described as the “ultimate disruptive force for real estate” (Business2Community) and thousands across the country have invested in real estate that they previously wouldn’t have access to.
There’s a lot of support for opening up the real estate market so that anyone can invest in projects they care about. However, the current regulatory environment makes it difficult and costly to structure deals that are open for investment from everyone.
Here’s a quick outline two of the regulations we use to put together offerings:
● Regulation D: Rule 506 of Regulation D permits us to raise an unlimited amount from accredited investors without registering a public sale through the SEC, as it’s assumed that accredited investors are financially able to bear the burden of investment decisions without a review by the SEC.
● Regulation A: Regulation A allows us to structure small offerings of securities that do not exceed $5 million in a 12-month period for unaccredited investors. These offerings require an offering statement to be qualified with the SEC, which results in time-consuming and costly scrutiny by the SEC. A Regulation A offering also needs to be registered in each individual state where potential investors reside.
We’ve now completed three public (Regulation A) offerings and over 25 private (Regulation D) offerings and, along the way, have given over 25,000 investors an opportunity to own real estate.
Our most recent public offering in Washington, DC, had 378 individual investors -- more than we’ve ever seen in a single deal.
From the very beginning we’ve wanted to give the local investor a chance to own a piece of their neighborhood. 25% of all investors in our last Reg A deal lived within a mile and a half of the property. Now that’s local!
As the only platform crowdfunding real estate investment from unaccredited investors, we plan to regularly publish data from our public offerings so that we can continue to help the industry develop and move forward.
By: Dan Miller
Co-Founder | Fundrise
Follow Dan on Twitter: @dan_miller
Visit Fundrise's Website: www.fundrise.com
Visit the Fundrise blog: blog.fundrise.com
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