In the U.S., investment in private development has long been limited to wealthy individuals; making the type of crowdfunding that raised $239 million from 3,100 people for a skyscraper in Bogota difficult. New securities laws should change that.
"The practice of crowdfunding real estate is spreading from South America — where Prodigy Network recently raised around $239 million from 3,100 Colombians to build a 66-story skyscraper in Bogotá — to New York, where the developer Urban Muse is hoping to offer a slice of a Brooklyn Bridge Park project to the public," reports Amy Cortese.
"That seemingly simple idea [crowdfunding development] is actually a radical departure from conventional practice, and requires some financial and regulatory gymnastics," she explains. "Under current law, only wealthy 'accredited' investors (typically those with a net worth of $1 million or more) are allowed to invest in private firms."
"But recent changes to securities laws ushered in by the Jumpstart Our Business Startups Act, signed into law in April 2012, will soon make it much easier for the Millers and other new-breed developers to 'crowdfund' real estate."
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