Real estate investment of the future = Crowdfunding?

The current financial model for real estate investment is pretty depressing for the creative-minded, where an overwhelming majority of real estate investment capital is reserved for object-oriented buildings at least a block in scale (ie office parks, strip malls, towers, subdivisions…)

However, just as YouTube is slowly redefining television and wikipedia has rendered encyclopedias obsolete via crowdsourcing, just wait until $ are applied to this customer-driven phenomenon then used in real estate.

For a hint of what’s to come, check out what happens when $ are applied to crowdsourcing, resulting in crowdfunding:

tribewanted
What the funded target gets: $1 to 2 million to develop a non-intrusive timeshare community as an alternative to massive landscape-changing resorts.
What crowdfunders contribute: $210
What crowdfunders get: 7 nights each year in a 100-unit eco-community on Fiji they co-design with 4999 others.

Slicethepie
What the funded target gets: An island in Fiji
What crowdfunders contribute: $30 per band plus votes and reviews supporting them.
What crowdfunders get: The opportunity to see their favorite unknown bands record their first album and a return based on sales over two years.

Sellaband
What the funded target gets: $50,000 to record an album.
What crowdfunders contribute: $10 per band.
What crowdfunders get: A limited edition CD of the band’s recording.

Liverpool Cultural Cafe (profiled here)
What the funded target gets: $1 million to bistro/bar/live music venue to develop local entertainment talent.
What crowdfunders contribute: $40 per donation.
What crowdfunders get: Ability to influence the venue’s development as well as Liverpool’s up and coming talent.

My Football Club
What the funded target gets: $3.5 million to buy a professional soccer team.
What crowdfunders contribute: $70 per share.
What crowdfunders get: Voting on strategy and personnel decisions with 49,999 others. An armchair coach’s dream.

A Swarm of Angels
What the funded target gets: $2 million to produce a movie.
What crowdfunders contribute: $50 per share.
What crowdfunders get: Voting on creative decisions with 49,999 others.

What’s next? Crowdsourced Beta Communities?
What the funded target gets: $10-20 million to build the kind of place in the image above.
What crowdfunders contribute: Commitment to buy a home and/or lease commercial space in the development ($100,000 to $500,000).
What crowdfunders get: The kind of community they’ve always wanted but nobody cared to build, plus a great return on their investment because of that.

Read more in BusinessWeek.

  • Sellaband believers also get money from the sales of the album and from advertising on sellaband.com.

  • Marvin Miller

    Neil, I think you may be onto something. This obviously would have to be done via nonprofit route and “shares” merely represent the right to vote and participate in the project, but not transferrable or sellable because you’d run afoul with securities laws. Any additional insight into how this might work?