Guest Post: What if Anyone Could Invest in New Housing?
The vast majority of Americans are in favor of building safe, decent, and affordable housing for all. However, the gap between the cost of developing more affordable housing and America’s ability to afford it has only grown wider in recent years.
How do we tap into this enthusiasm for building more housing to create better, more inclusive neighborhoods? One answer lies in who actually owns our neighborhoods.
When new housing is built, a lot of decisions need to be made about how it’s funded, who will live in it, and, critically, who owns it. Even after the developer contributes their own funding and secures a large loan from the bank, more capital is often raised from investors. Contributions from real estate investors can range from tens of thousands to millions of dollars, and the return they earn is proportional to the equity they’ve bought in the property.
Frequently, real estate developers crowdfund investor capital to fund portions of their deals without contributing more of their own money. There’s an additional benefit to crowdfunding, though, that has less to do with finances.
Crowdfunding is more democratic. As more people get involved in the funding process, they can begin to influence how new housing might improve their neighborhoods and which projects are worth their investment.
One major obstacle? In many redeveloping neighborhoods, land is owned by wealthy people who don’t even live there. In other words: the neighbors don’t actually own the neighborhood.
Between accredited investor laws and account minimums required by most crowdfunding platforms, the average person who lives in our neighborhoods can’t actually invest in the projects being built around them. Instead, a wealthy and privileged network of real estate investors often owns the majority of real estate equity in our communities.
What if anyone could invest in the places they love in an easy and accessible way?
New technology is making it possible for this to happen, and there are several apps entering the market that offer the ability for everyday citizens to put money toward real estate developments in their own communities. The Columbus-based startup, Rhove, is one of them. They’ve built an app that enables anyone to discover and invest in real estate projects with the click of a button—and a bank account. By empowering residents to own equity in real estate, these investment tools help connect developers who build housing with the neighbors who want to support it.
Our sense of belonging, our connections with one another, and our democracy as a whole are stronger when everyone has ownership in the places they live, work, and play. When we can align our capital with the people and the places we believe in, we can shape and grow our communities in a more intentional and significant way.
Content provided in conjunction with Rhove.
