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Kickstarter for real estate development

There's been a lot of chatter over the last year or so about how crowdfunding may impact the world of real estate. Fundrise, a DC-based startup has gotten a lot of attention as it plows new ground in this territory. Emily Badger wrote a piece last year that I thought was especially instructive. Some points:

This is a key point. Crowdfunded real estate isn't an important idea because it may enable the lady next door to make it big like a real-estate developer. It's an important idea because it changes the trajectory of neighborhoods. The crowdfunding mechanism changes what gets built. O'Connell's query with wealth investors – who have no reason to be interested in this question – misses this point.

The wealth-manager's criticism – "this should be money they could otherwise just flush down the toilet" – also sidesteps the more apt comparison. People are already flushing money down the toilet on Kickstarter projects from which they never expect (or receive) any return. For many investors, crowdfunded real estate is more akin to a Kickstarter campaign that may improve your neighborhood than a mutual fund that may improve your net worth.

That last point I believe is the critical point, and certainly opened my eyes on the topic. Crowdfunding for real estate, when viewed as a community good that people don't expect a return on, is a whole different beast than one in which several people pool their money in order to make more. THAT is something that could certainly change how some neighborhoods and people look at development.

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