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GoodCrowd14 Recap: AdaPia's Presentation at Snowbird

GoodCrowd 14 was a success! Indeed the conference in Snowbird, Utah was an atmosphere conducive for networking with some of the most knowledgeable people in the industry.  For those of you who couldn't attend, you missed a great presentation by Patch of Land's very own CMO, AdaPia d'Errico. Not to worry however, we've transcribed her speech and uploaded the corresponding PowerPoint slides so you could relive it in the comfort of your own home.  We hope you enjoy the following presentation:

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Introduction

Hello I'm AdaPia d'Errico, Chief Marketing Officer at Patch of Land. Patch of Land is a Los Angeles based real estate crowdfunding platform that focuses on lending short term real estate debt to developers who are rehabbing properties across America, and improving neighborhoods. We issue a security, by the standards of the SEC, and are bound by certain rules and regulations in who we can take money from, how we report, and what we use the money for. We are, in essence, a crowdinvesting platform.

I'm here today to talk about Non-Profit partnerships with Crowdfunding for Community Development. We'll go through examples of each individually and work our way to speaking about the how these can come together to create a win-win-win-win situation.

Crowdfunding is a hot topic and real estate within crowdfunding is an even bigger topic. The growing interest is providing new opportunities for developers to access money in order to complete renovations, rehabilitation, construction and clean-up.  What's even more striking, especially on the real estate investment side of crowdfunding, is the interest from Wall Street in the form of private equity, hedge funds, capital companies, banks, etc. to participate in this new flow of capital.

Clearing the Air

It's easy to get lost, as a start-up, in the allure of the capital, and for this reason I'm especially honored and excited to be here today to speak about the essence of crowdfunding, and social good and impact it can have - in part thanks to the funds that are being funneled through platforms.

Ultimately, the role of a crowdfunding portal dealing in real estate, is to create access to funds to people and companies who build, rehab, refurbish or build something new that can have a real, tangible impact on a property, a neighborhood and a community.

There is, unfortunately, a negative stigma around 'rehab's and 'flips' when we talk about real estate, but beneath this, the actual work that these businesses, and mostly people, are doing, is beneficial to the communities that are impacted by the hands-on work being done. Old buildings are made new, a previously unlivable home can now be occupied by a new family. There is a great impact that rehab has on a community! And it is positive, especially when a community comes together to make it a reality.

There is no shortage of opportunities for non-profits to get involved in this movement in a variety of ways. Some are already doing it. Some are already crowdfunding. Some are getting investors to crowdfund ...

IOBY: Crowdfunding Neighborhood Improvement

My first example is ioby- IOBY stands for In Your Back Yard, and I first met the Founder, Erin, last year when she was presenting in Telluride. She told the story of the first community project, where a group of people in a suburb of New York came together to create a park for their children. At the time, there was no safe, public place for their children to play. They raised $5000 to create a park for their kids, very small at first, a little bit of AstroTurf, but still better than nothing. Within a matter of months, more of the community came together, worked with local officials, raised more money, and had a 2-city-block park, blocked off from traffic, for their kids and their community.

Its mission: Deepen civic engagement in cities by connecting individuals directly to citizen-led, neighbor-funded environmental projects in their neighborhoods, primarily through ioby’s web-based crowd-resourcing platform.

They've since expanded to other cities and states, like Memphis and Miami, and partner with non-profits to complete projects like Livable Memphis, the Hampline and We Are a Neighborhood to repair this run-down building and establish a community building.

In these scenarios, there is no investor involved, monies collected are donations, and there is no asset or security. This is pure community, but with a huge element of development and rehab.

Impact Investing with AHP

My next example is a non-profit that changed into a for-profit: American Homeowner's Preservation. This company buys distressed properties in large lots of many properties, then resells the properties. Often, they resell the properties to small business developers who rehab them, and make them livable again. Patch of Land is proud to say that we are working on a pilot project with AHP to connect developers that we work with, to properties that AHP has available, which need this hard work to improve the properties, and the surrounding neighborhoods.

In this example, there is investment, a real return for those who are funding the purchase and sale of the lots, as well as those doing the rehabs. Even though AHP is a for-profit company, it began as a 506c3.

Examples of Success Stories

In this next example, we have a celebrity - LeBron James - who, through his non-profit foundation, worked with an education program to rehab someone's home. The impact of this work, on one single home, for one family, can almost be considered priceless. It's obvious that the use of celebrity plays a big role in the success of any campaign, however, I want to point out that this campaign was about the impact of a rehab, the positive outcome of what many professionals do for a living, and why we want to raise funds through a real estate crowdfunding portal, to enable them to continue to do this good work. And this is another example of the power of partnerships.

This next example needs no introduction - Habitat for Humanity. They are one of the most well-known organizations in the world who do development work. And the impact of their work in communities has been measured and proven for years. To date they've raised over $5 million dollars and helped 800,000 families into new homes. This is a powerful example of what community development can mean on a broad scale. In a recent campaign in Colombia, they completely changed the relationship H4H had with the Colombian government with a simple, $200,000 campaign that helped 250 families. Since then, it has grown to over $1 million.

H4H is an example of a pure non-profit organization that raises to do community development on a global scale. They work with local communities to make this impact and count on the help of not only local people, but international donors.

Crowdfunding Platforms with a Positive Purpose

I'd like to now bring the discussion around full circle, and back to the US, and talk about two real estate crowdfunding platforms that have both given back to their communities through investment crowdfunding.

The first is Fundrise. Fundrise saved the Nation's oldest African-American bookstore, when the group that was trying to save it, could not raise all the necessary funds, even htough they had succeeded in raising $1.6M of the $2.6 million through a local non-profit organization. The property was listed on Fundrise, where investors put up the missing $1 million.

This scenario shows community + investment + crowdfunding + nonprofit for the win. And Fundrise has a very strong community and development message in their company, which is truly empowering to everyone who participates on their platform.

The second real estate crowdfunding platform that has crowdfunded investors to work on community development is Patch of Land. Patch of Land works with developers across the country, who rehabilitate properties, including storm-damaged areas of Florida, New Jersey and New Orleans.

In this example, this developer from Georgia who specializes in working with Veterans Affairs to resell high opportunity properties to vets, received funding through Patch of Land to purchase and rehab a property that she will sell to a vet through a Veteran Administration loan program. She was funded by accredited investors on the platform, and is in the process of completing her loan with us. Again, this is only one other example, of the way synergies can be found between developers doing rehabs, non-profit or government agencies working with programs and grants, investors and crowdfunding as the means to flow the capital through to those who need it, who work with it, who make real impact on their communities.

Final Thoughts

I've really only scratched the surface of the possibilities of crowdfunding for community development. It is already happening, perhaps under other names, or other programs. At Patch of Land, we have built our business on crowdfunding for community development and it means that we:

- Invest in our communities, not just the property of our communities

- Focus on rehabilitation for residential homes

- Work with local developers know and love their neighborhood, as opposed to large corporations

- Philosophy of “having your friends, family, neighbors” invest in your projects

This is the trend. This is the future. We can find new models of collaboration where a non-profit can work with a portal that creates a product, in which people will invest. Through this, we are putting money to work on multiple fronts - the money is going to work on the property, on the property value, in creating jobs, and also, investors are getting a financial return. It is what investing is all about - we work hard to earn money to make a living, and also use savings to work for us, so that we may grow those savings into funds for children's college education, a down payment on a home or retirement. Investing helps us achieve financial goals, and investing in a project that has such a huge community impact, creates jobs, and raises property values, can and should be the future of crowdfunded investing.

 

We hope you enjoyed this Patch of Land presentation.  After reading this, what do you think the role of crowdfunding will be in the future?  Do you think new laws will be passed to help communities uplift themselves?  Please leave a comment and let us know how you feel.



If you want to learn more, take a look at some of the most commonly asked questions we receive about real estate crowdfunding on a daily basis and find out why so many people are crowdfunding real estate projects across the country with Patch of Land.
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