Business

Forget Wall Street Investors, Local Residents Fund Neighborhood Development

Forget Wall Street Investors, Local Residents Fund Neighborhood Development
by Kathryn Buschman Vasel for the Money Tree Section of Fox Business News Feb 8, 2013

Could this be the future of local development?  Will citizens invest in their local neighborhood? Is Internet-based crowd funding in the future for your business? Check out this article about a new development in Washington DC and let us know what you think.

Gina Schaefer says she loves her new neighborhood, and she’s putting her money where her mouth is. Schaefer has lived in Washington, D.C., for 22 years and recently invested in a new property being developed close to her new home — if she ever wonders about the return on her investment, all she has to do is take a walk.

“There is a lot of development going on in my area and I want to be able to walk by and say ‘hey that’s partially mine’ or ‘I’m an investor in this property’ or take my friends to the business that is going to go into that building and help support that building as a patron,” she says.

Schaefer, who runs hardware stores across the District, uses online-crowd equity platform Fundrise to invest in local real estate. The website, which was launched in August 2012 by brothers Ben and Dan Miller, allows local residents to buy shares in neighborhood development projects.

“We take a building and we take it ‘public’ so you can buy a share of the company that owns this building, the way you’d own a share of Apple of IBM,” says Ben. He says share pricing is based on demand, with some shares selling for $100 and others up to $25,000.

“When you own a share of the company that owns this building you get cash flow from the rents, you are like a landlord, so you get rental income every year, you get appreciation if the building appreciates, if the neighborhood grows, the value of the stock grows with it.”

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