Working as a real estate developer, Ben Miller noticed that there were a lack of good opportunities in real estate for the average investor as well as many inefficiencies in the way projects were financed.
He then set out to solve both those problems.
Harnessing his deep knowledge of the development process gained through over 10 years of experience as a developer, Miller created Fundrise — a collaborative, online platform that connect investors to individual properties.
Today, Fundrise is at the forefront of the online real estate investment industry. Some of the biggest names in real estate are using Fundrise to connect with the site’s 57,000 member investors. Case in point: the instant you land on Fundrise’s website, you’ll see an investment opportunity available at Silverstein Properties’ 3 World Trade Center.
We sat down with Miller to talk about the evolution of Fundrise, its growth strategy and how it’s using drones to check in on investments.
BuzzBuzzHome: Tell us about the origin story of Fundrise. How did you first develop the idea?
Ben Miller: I spent 10 plus years as a real estate developer and, in 2010, I was developing a project in an emerging neighborhood in Washington, DC.
The traditional sources of capital didn’t understand the project or the neighborhood or why we wanted to build there. And then it dawned on me that there’s got to be another way to raise money for real estate.
No one had ever raised money for a real estate deal on the Internet before. We were the first.
BBH: Before you co-founded Fundrise, you created Popularise, another collaborative online real estate tool. What is Popularise? Are you still involved with its day-to-day management?
BM: We created Popularise because we thought that the real estate industry needed ways to crowdsource input and ideas, and participation and opinions. Fundrise is the capital behind it.
The site is still active but all of my time and energy is spent on Fundrise.
BBH: How did this experience of building Popularise inform the creation of Fundrise?
BM: Well, one of the things we learned is that there are a lot of ideas, but not as many good investments. That’s when we realized that there was a real need for better, more flexible capital.
BBH: How did you go from 0 to over 57,000 members? Can you describe your growth strategy?
BM: We found a major inefficiency in the financial market and have worked extremely hard to build a better alternative for both individual investors and real estate companies raising capital. Press and marketing play a role, but we’ve really seen most of our growth happen organically through word-of-mouth.
Moving forward, we’re going to continue to leverage what we know works — continuing to deliver high quality, low-fee investments for our users.
BM: We do well when our investors do well so we’re always looking for new ways to survey investment opportunities and check up on current investments.
The level of detail drones can provide is even richer than one could gather when actually walking a property.
To consistently outperform, we must always use the most cutting edge technologies. We use every tool imaginable to bring our investors the best deals — drones give us another set of eyes on the ground.
BBH: In a post on the Fundrise blog from last month you wrote that rates are expected to increase from 0.75 percent to 1.5 percent over the next 2 years and a modest recession is expected in 2017. How will this impact the national real estate market?
BM: Interest rate hikes are all sound and fury. Central banks can only raise interest rates a limited amount before pushing economies back into recession. The world suffers from demographically-driven deflation. Every year for the next 15 years, more people will leave the workforce than join it, which acts as a governor on growth. Until the workforce stabilizes, interest rates will remain low.
BBH: What’s next for Fundrise in terms of expansion? What’s on the horizon for the second half of 2015? What about 2016?
BM: We’ve got a busy fall ahead and a really strong pipeline of deals shaping up. We’re starting to take on foreign investors and are looking at an overseas expansion, too. The whole team is excited about it.