I have been following the growth of crowdfunding for a long time, and I’ve been particularly intrigued by the potential for crowdfunded real estate development.  But so far truly broad based crowdfunding in real estate has been rare, with the most widely known examples coming from the Prodigy Network based in Bogota, Columbia.

Imagine my surprise, then, to learn of a crowdfunded real estate deal  — with a range of small, middle-class investors — working a project in my own Cincinnati, Ohio — a state that (at the state bureaucratic level) has been a complete dorkwad when it comes to getting their heads around crowdfunding.  As Bowdeya Tweh of the Cincinnati Enquirer wrote about project leader Albert Smitherman:

He helped organize a group of 43 investors – many of them black, female, middle-income or complete novices to real estate investing – to participate in a deal that led to a $22.5 million sale of a building now largely occupied by Christ Hospital.

The unlikely investors won’t say how much they earned as a result, but Smitherman said at least one person was able to significantly accelerate retirement plans.

“We gave many people the opportunity to invest and feel commercial real estate and how it can truly build wealth,” said Smitherman, chief executive of Walnut Hills-based Jostin Construction. “We wanted to make it so people in the deal came from all different walks of life.”

The area where the building is located is in a neighborhood that has experienced massive disinvestment, but also has significant potential because of its proximity to Cincinnati’s world-class medical centers.  Operationally, it seems likely that this project worked because the people leading it had both real estate expertise and deep credibility in the community.  Crowdfunding, like any kind of investment, depends hugely on trust, and trust isn’t quantified in a spreadsheet, especially when it’s a new idea like this.

I haven’t had a chance to talk with the Smithermans and the other participants, but I hope I’ll be able to.  While this is very encouraging, it’s also one of those the-root-of-the-success-lies-in-the-hidden-details situations.  So I hope we’ll have a chance to learn more about how such a potentially groundbreaking project got pulled off.

Click the links above, or read here: http://news.cincinnati.com/article/20140218/BIZ/302180020/Unlikely-investors-succeed-real-estate-deal?nclick_check=1