Fundrise is kicking off their 3rd Regulation A public offering with the property located at 1539 7th Street NW, Washington, DC. This will be Fundrise’s first commercial real estate offering in the neighborhood. Investors living in DC, Virginia, and, for the first time, Maryland will be able to participate in this Direct Public Offering of a real estate project.
The property is centrally located to a variety of amenities and walking distance to two metro stations.
While the total project size is approximately $2 million, $350,000 will be made available to the general public for investing. Investors looking to get into the game can invest as little as $100 per share in this project. The current estimates show that investors can expect an eight (8) percent return in the first five (5) years with increased growth each year beyond that.
This expected return is based on a number of factors. The property is located in one of DC's fastest growing neighborhoods. In fact, the location was once well known as a cultural district figures like of Duke Ellington called home. The district is once again thriving and young artists as well as other professionals are being drawn into the area. Twenty new restaurants will open in the area this year, and there has been over 1.5 million square feet of new development within two blocks of the property, including a hotel, grocery store, and apartments.
Not only can investors expect to see an eight (8) percent return during the first five (5) years, if the principal amount is not returned after that period, the rate is expected to rise more. Currently year 6 is expected to see a 12 percent return and every year thereafter it is expected to grow by another two (2) percent. These returns will be paid out quarterly.
WestMill Capital Partners, the developers of the property, have high hopes of leasing the property to a retail or restaurant business. They expect the leasing process to take anywhere from 6 to 9 months to complete. This period includes the time necessary for the future tenant to make any renovations for their business.
Projected returns are certainly nice. However, investors want to know what they are getting into. Fortunately, there is a 21-day period where investors may review relevant sales materials to make an informed decision. In addition, the waters were tested with this property to ensure that there would be enough interest to move forward with the offering.
Investors are also confident in making investments through Fundrise. In the past three (3) years, the company has qualified three (3) Regulation A offerings with the Securities and Exchange Commission (SEC). This comes out to approximately 20 percent of offerings cleared by the SEC nationally. Statistics such as these would indicate that Fundrise is an expert in the field and understands how the process works.
Once the offering is complete, Fundrise hopes to publish the information regarding the investment amounts, timing, costs and much more. Their hope is to provide an example of how crowdfunding under the Jumpstart Our Business Startups Act (JOBS Act) can be used successfully. This can provide the much needed confidence boost that potential investors, entrepreneurs and regulators need to really adopt the idea.
If everything goes as planned, investors will certainly see a return on their investments. With shares as low as $100, this is a piece of property to begin your journey into crowdfunding. Fundrise is the only company in the US that has a proven track record doing this. Actually there is no other recorded Direct Public Offering for realty recorded the last 20 years.
A success with this piece of property will certainly go a long way in sustaining the interest in crowdfunding. The public’s interest will go a long way towards building a better future for the country as a whole. By allowing the public to invest in their offerings, far more can be achieved than by limiting it to a select group. Please note that the critic of Direct Public Offerings is that should a deal go south or fail then all shareholders lose their investments. This is also the argument for an explosion in realty crowd funding as the real asset - land and buildings - will always exist versus a tech company on paper that has no irreparable real estate assets.
Before investing, it is wise and prudent to do your own research into matters. This will allow you to make the most informed decision possible.
For further information regarding this property, please visit the Fundrise page. Fundrise will be at the April 24 Global Real Estate Crowdfunding Conference in New York:
David Drake is an early-stage equity expert and the founder and chairman of LDJ Capital, a New York City private equity advisory firm, and The Soho Loft - The Voice of Capital Formation - a global financial media company with divisions in Corporate Communications, Publishing and Expos & Events. You can reach him directly at David@LDJCapital.com.
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