I really want to like what is proposed in The Real Estate Deal That Could Change the Future of Everything, and on a purely theoretical level, I do. Coming from a liberal-arts background, I feel the idea of partial deregulation and opening the ability for non-millionaires to get into real-estate really enticing. I think that the brothers’ approach of ‘crowd sourcing’ this endeavor is aligned with the times and a creative way to get people involved in real-estate. The problem I have is that the “community investment solution” they propose only tells part of the story.
H St. NE is the major commercial strip of Near Northeast neighborhood in Washington DC. Historically it has been an African-American community, with families living in the same houses and having deep generational bonds with their neighbors. As with so many neighborhoods, it is the site of rapid gentrification over the past few years. In the interest of full disclosure, I am one of the guilty parties, and for a year rented a small basement apartment at the intersection of 8th and H, in the heart of the strip. As illustrated in this 2006 article in The Washington Post, Whose H Street Is It, Anyway?, there is a deep tension between the black residents of the neighborhood and the gentrifiers. I won’t go into the politics of gentrification, but only want to expose that H St. is in the 2nd phase of gentrification.
What does this have to do with Fundrise? In both the article and on their page, they claim to represent the ‘community’ who live just next door. “We asked ourselves, “Who really knows H Street?” and “Who really cares about what happens there?” The answer: the people who live, work, and spend time there. So why can’t they invest with us?” On the fundrise website, they have a rotating view of the 175 investors, and after pressing refresh about a dozen times, I counted very few of people who looked to be a part of the original ‘community’ of Near Northeast. They mention the word community eight times in their article, but I don’t see that the community I saw in the first days of the neighborhoods gentrification process represented in the development of an “Asian-inspired market, coffee shop and restaurant”.
So, while I agree in theory with their attempts to work within the complex labyrinth that must be the SECs regulatory code surrounding real-estate investments, I feel that their explanations of their efforts in the Near Northeast neighborhood to represent the needs of the community disingenuous. I don’t fault them for gentrification, but I do feel it is important to know the whole story when we look at these types of innovations, so that we can better understand that not everyone wins.