Five thousand dollars is all you need to own a little piece of this big Lower Manhattan real estate development project. The high profile 3 World Trade Centre (WTC) deal is just one of a growing number of real estate investment opportunities through a crowdfunding portal.
The Firm Behind the 3 WTC Deal
Fundrise co-founder, Dan Miller, calls it “proof of the power of crowdfunding”, and he appears to be right. Fundrise is the real estate crowdfunding portal where you can find the WTC offering. The Washington D.C.-based firm is using new securities laws to make it possible for more regular people to invest in a real estate deal, and technology is allowing them to distribute – or democratize - the investment, thereby challenging the traditional model, where, as Miller has been noted to say, the banks act like “country clubs” and control tightly who gets in.
How the Deal Works
Fundrise is underwriting the deal and funding the project on its own balance sheet. Investors are buying the bonds as senior secured debt instruments. There is a projected five per cent tax-free return over five years. Fundrise generally claims that all of its real estate crowdfunding deals include 10 to 20 per cent capital junior from the real estate company in the first loss position.</p>
Want In? There’s Still a Catch
It’s not quite as easy as grabbing the wad of cash from under your mattress. To be eligible for this opportunity, investors must be accredited (Are you? We can help you get accredited.) Under SEC rules, that means an individual must have earned income of more than $200,000 in each of the preceding two years, and a net worth of over $1 million.
About Real Estate Crowd Funding
The number of real estate crowdfunding firms continues to grow, and it is changing the real estate investment landscape. Developers have new ways to finance their projects. Socially minded investors have new ways to support their communities. And smaller investors now have a way in.
About 3 World Trade Center
WTC is expected to be the 3rd tallest tower on the Lower Manhattan site, with 80 stories and 2.5 million square feet of office space. Completion is scheduled for 2018.