Crowdfunding has brought all manner of creative projects and publications to life. A Portland, Oregon, developer believes a community fundraising platform, when applied to real estate development, can also help alleviate the pressing issue of homelessness.
Earlier this week, Guerrilla Development Company launched a $300,000 crowdfundraising drive for Jolene’s First Cousin, a forthcoming multi-use project in the city’s Creston-Kennilworth neighborhood comprised of commercial space, apartments, and housing for the homeless. Looking past the project’s cheeky name—it’s based on an off-color story about a founder’s first cousin—the project’s potential to democratize development, help the community, and potentially make money should be taken very seriously.
“The homelessness issue in Portland is extremely present, and it’s on everybody’s mind,” says Anna Mackay, a designer and developer with Guerrilla. “This felt like our call to arms to tackle the issue.”
In addition to commercial space and two market-rate residential lofts, the two-story Jolene’s complex will also contain an 11-room SRO, or single-room occupancy, a dorm-like living arrangement where each resident gets their own 100-square-foot bedroom and access to shared common space. Six of the room will be given to working homeless Portlanders, as part of a partnership with the Street Roots non-profit, while the other five will be rented out to the general population for $425 a month.
It will admittedly only make a small dent in the issue—more than 4,000 Portlanders are homeless on any given night—but the developers hope it becomes proof of concept for a new way of approaching and alleviating the problem.
“This offers crowdfunded social impact investment,” says Mackay. “You can volunteer at a shelter, but sometimes, it’s hard to feel like you’re making a different. Tying the development with homelessness housing creates a compelling narrative.”
After the success of the company’s previous crowdfunded real estate venture, the Fair-Haired Dumbbell, a mixed-use commercial space which just opened and started signing leases this fall, Guerrilla decided to double-down on community-oriented development. This time, the company tried a slightly different strategy .
After seeing that 90 percent of the participants in Fair-Haired Dumbbell were from Portland, they experimented with a slightly different form of crowdfunding that allowed anybody in Oregon making $70,000 a year or more to invest $3,000 or more in the project (technically, it’s taking advantage of Rule 504 of Regulation D, qualified by the SEC and the Oregon Secretary of State). Like other real estate crowdfunding platforms, it significantly lowers the bar of entry for investors in commercial projects.
With nearly $300,000 raised in less than a week ($297,500 as of press time), Guerrilla plans to stick to its initial timeline, aiming to breaking ground in February and open next fall. Oregon residents who invested in Jolene’s will be given a 5 percent preferred return annually for 10 years. For comparison, the Fair-Haired Dumbbell project raised $1.5 million from 111 investors from five states, and has already paid out $120,000 to crowd-investors, according to Guerrilla.
The results of this unique approach, the company says, speak for themselves.
“Part of the Guerrilla ethos is finding a way to turn the story in its head,” says Mackay. “There’s no reason these different aspects of development can’t co-exist.”