A New Frontier

by BHHS Michigan Real Estate on 4/23/2014

Crowdfunding platform opens community real estate investing to the masses

A new crowdfunding portal wants to encourage everyday people to invest in Michigan-based real estate projects that support startups and small businesses.

The barrier to entry: $100.

Within the next 30 to 60 days, the Ann Arbor-based Michigan Municipal League and Washington, D.C.-based Fundrise LLC hope to launch a new website (Michigan.fundrise.com) that will allow Michigan residents to invest in in-state real estate projects.

Fundrise offers accredited and unaccredited investors a way to invest in community-based development across the country, but its efforts in Michigan were made easier by the signing of the Michigan Invests Locally Exemption (MILE) Act. The law, signed by Gov. Rick Snyder last December, liberalized the process of equity-based crowdfunding for Michigan residents.

Executives at the MML see the partnership with Fundrise as a way to offer brick and mortar investment opportunities across the state to complement its work with Localstake, another equity crowdfunding portal for small businesses.

Supporters of the partnership hope it will democratize real estate investing by putting it in reach for more people across the state. They also hope it will help small businesses get their projects off the ground.

“I think it’s super interesting and could really reduce the barriers to entry and ownership,” Cummings told MiBiz.

While the crowdfunding mechanism might not offer the amount of capital needed for larger, transformational projects, Cummings said it could help foster community pride and make it easier to accomplish smaller neighborhood revitalization projects that make sense, but might struggle to gain traction with traditional lenders.

Even the Michigan Bankers Association is supportive of the concept and wants to see how crowdfunding will work for commercial real estate.

“We think it will be a great source of supplementary funding for business startups and operations,” said David Worthams, the association’s policy director.

Want to learn how crowdfunding works? Click here to read more

Brumback, Elijah. “Crowdfunding Platform Opens Community Real Estate Investing to the Masses.” MiBiz [Western Michigan] 14 Apr. 2014, Vol. 26/No. 13 ed.: 1+. Web. 23 Apr. 2014. http://mibiz.com/news/real-estate/item/21464-crowdfunding-platform-opens-community-real-estate-investing-to-the-masses