CROWDFUNDING:

Nat M. Zorach, LEED GA BPI BA, RESNET RFI THE HANDBUILT CITY CHICAGO, USA

THE NEXT TOOL FOR COMMUNITY DEVELOPMENT FINANCE?

HANDBUILT: WHO WE ARE

¡ Real estate development

¡ Craft, creativity, capital ¡ Affordable housing ¡ 400+ units acquired, or

renovated with partners

¡ Investor network on the Fundrise platform with 182 members

¡ Why crowdfunding exists ¡ Cycles of capital

innovation ¡ Stock market– the original

crowdfunding marketplace ¡ The tech revolution, 2008, & impacts on finance ¡ Taking a turn off the one-

way street of capital

A BRIEF HISTORY OF CAPITAL

¡ Local leverage of information and support

¡ Accountable, affordable, flexible capital ¡ Building a better model for equity ¡ Invest locally, profit locally, reinvest

locally ¡ Savings accounts have a lousy interest

rate ¡ Evolving regulatory environment

SCOPE, LIMITS, STRATEGY

¡ Groundfloor (Raleigh, NC) ¡ Patch Of Land (CA)– “P2PRE”

lending ¡ Realty Mogul (CA): Accredited only ¡ Fundrise (DC): Making tracks, $31

million in venture capital / Series A ¡ Don’t be fooled by imitations– equity

crowdfunding vs., say, snake oil sales

WHO’S DOING WHAT

¡ Platform to crowdfund real estate investment ¡ SEC Regulation A investment offerings

FUNDRISE

¡ Outreach & invitations ¡ Support for a project vs. for the platform ¡ Accredited versus unaccredited

investors

STEP 1: BUILDING A NETWORK

STEP 2: CREATING AN OFFERING

¡ 1. Determining the scope of the project § $250,000+

¡ 2. Understanding the capital stack ¡ 3. Preparing documentation § What Fundrise does for you § State-by-state filings § The private placement memorandum

¡ Then what? Payback, reporting, etc.

STEP 3: PACKAGING THE OFFERING

STEP 3: PACKAGING THE OFFERING

STEP 3: PACKAGING THE OFFERING

¡ “The Dumbbell” (Portland, OR) § $3.9m raised (“test the waters” offering, exceeded target size by more than double)

§ 10-12% return, 3-5 year payback ¡ 965 Florida NW (Washington, DC) § $974k raised, exceeded $300k target § 8-10% return, 3-5 year payback

CASE STUDIES

¡ Marcus Books, San Francisco § First affordable housing offering ever launched

§ San Francisco Community Land Trust § Purchase + affordable housing preservation § San Francisco: affordable = $3,200 / month rent

§ Highly leveraged deal; <2% principal’s equity § 4% return offered to accredited investors

CASE STUDIES, CONT’D.

¡ GARY, INDIANA § 22 affordable units (rehabs)

§ Energy efficiency § Waste diversion § $376k project; $17k / unit § Strong rental market

PROPOSED OFFERINGS

¡ 28 lots, 371k ft2 of land in the Lakeshore ¡ Affordable sale prices of $115-165k apiece ¡ Refinance upon completion ¡ Rental for $700-1400

NEW CONSTRUCTION

¡ Liquidity of capital: You can spend cash, but not, say, bricks or scrap copper (North St. Louis excepted, of course)

¡ Time to build individual relationships ¡ Difficulty of getting skin in the game ¡ Regulation–we know it can work, but

how universally can it work?

DOWNSIDES: MACRO

DOWNSIDES: RISK

¡ Can we do this in Chicago? St. Louis? Gary?

¡ Mobilizing cash for better models of equity

¡ Developing the right project ¡ Putting skin in the game ¡ What exactly I am doing here

LET’S DO IT

¡ Get in touch: nathaniel@handbuiltcity.org ¡ Our network on Fundrise:

https://fundrise.com/networks/the-handbuilt-city/view

THANKS!