When Ben Miller was a DC real estate developer, he discovered a local property that he – and the building’s surrounding neighbors – thought was a perfect purchase. The only people not on board: Ben’s investment partners – the guys with the actual money – who simply didn’t appreciate this opportunity because most of them were not living day-to-day in the nabe; they were not understanding what the neighbors were envisioning. The partners’ final vote: thumbs down.
That’s when the entrepreneurial light bulb above Ben’s head switched on. Go online and give the gift of investing in high-quality real estate to the people!
As co-founder and CEO of Fundrise, he’s allowing peeps without deep pockets a chance to get some skin in the game.
Starting in 2012, Fundrise opened the door for real estate crowdfunding (think Kickstarter). Today, the site sees average returns of 12-14% (Ben says this is 8 ½ times better than the S&P 500 Index in 2015). Investors can get involved at different levels, with initial investment amounts as low as $1,000. And real estate developers love it, too – finding Fundrise’s capital to be flexible and well-priced.
This bottom-up approach to commercial real estate laid its foundation in DC, and since expanded into LA, San Fran, San Diego, Philly, Denver and NYC. Ben recalls his original Fundrise investment: $325k from 135 people, which took four months. Today, he says the site can raise $300k in under two minutes.
Over 100 commercial real estate properties are showcased on the Fundrise site – everything from a small, urban restaurant space to skyscrapers as big as 3 World Trade Center. All in all, that’s nearly $3 billion worth of property with more than 90,000 members. Even traditional avenues of commercial real estate investment are beginning to compete with crowdfunding on the big-deal level.
Despite this success, Ben says that this concept is still very new and unfamiliar to most people (questions like “how will this affect my taxes?” are still common). However, the value is becoming increasingly understood and going mainstream.
Over the last 40 years, a tangible asset like commercial real estate has pretty much outperformed every investment type (like stocks and bonds). Yet with that stability came layers of fees, overhead, marketing and expenses. Now, with Fundrise eREITs™ (online real estate investment trusts), there are no markups, bells, whistles, or additional charges.
The ease of investment is not to say that it was a breeze for Ben and his partners and staff to build Fundrise into what it is today. He compares growing a business to having a child, where people warn you that you will never know how difficult it is until you actually have one. There is lots of learning involved, Ben says; you have to be tough and strong, with the fortitude to grind through the challenges that happen day to day.
He believes that starting your own business is a calling, which is the only real reason why you would commit to the emotional, physical, intellectual and financial demand.
Ben recommends the book Antifragile: Things That Gain From Disorder, by Nassim Nicholas Taleb. The valuable advice: don’t obsess on overthinking what is going to happen next. Stop trying to second-guess – all the short-term planning in the world will not stop the forces of reality from setting you off in a new and unexpected direction. The only way to truly travel is to execute, not outthink. It’s not about resisting shock and trying to avoid it; it’s about learning from it and growing stronger as a result.
Additional advice from Ben: be humble, and find people who are humble, hardworking and smart. From there, everything else figures itself out.
Find out more about Fundrise.
Photo: Ben (right) with Fundrise COO Brandon Jenkins, and their dogs, Zappa and Kona, respectively.