Company plans to crowdfund new Seattle townhome development
SEATTLE -- It's common in natural disasters and in medical bills; for college funds, honeymoons, and more -- and now crowdfunding is being used to pay for new real estate developments.
New York-based EquityMultiple is currently planning an 11-unit townhome development for the Georgetown neighborhood of Seattle and is seeking people to invest anywhere from $5,000 to $400,000 to help build the project. The homes are projected to sell out by December 2018, with a 20 to 24 percent net internal rate of return for investors, the company said.
"It's very, very hard for individual investors to get access to real estate deals," said Charles Clinton, chief operating officer and founder of EquityMultiple. "We saw this tremendous hole in the market. Let's let individual investors get into real estate more easily, in a streamlined way."
The startup has developments in the works from San Francisco to New York and Milwaukee, but the project at 6726 Corson Ave. S. is their first foray into the Seattle market.
"I think the whole idea of ownership is starting to fundamentally change, and we're just a part of that bigger movement," Clinton said. "Our company started out in a WeWork [coworking space] so we're definitely very familiar with the 'sharing economy' concept."
The future townhome site is currently occupied by an empty, single-family home. Neighbor Angielena Chamberlein said she moved to the area for the character and community, and she said she hoped whatever replaced the vacant home would still maintain the neighborhood's identity.
"That particular house has been an eyesore in the neighborhood for some time. How it's going to be built up -- it seems like it's just going to be a big block to me," Chamberlein said, "I do hope those investors get reimbursed for their investments and hopefully we get some good neighbors."
Clinton said the Georgetown project filled up pretty quickly but additional investments might still be possible. The company tries to safeguard investors by doing their due diligence on the real estate company behind the project, which in this case is Seattle's Build Urban.
"I think at the end of the day, risk and investing go hand in hand," Clinton said, "so the question is: how do you manage risk effectively."
"The goal is individual investors can come in for as little as $5,000 or $10,000 for a project and really be a co-owner," he added.