Crowdfunding Comes to Austin
You expect crowdfunding efforts for tech, but the guys at Inner 10 Capital had an idea to take advantage of the growing demand for residential product by using it to raise $25M for single-family projects. (You can now use crowdfunding to invest in a building or help your nephew raise money to go on tour with his calypso-punk band.)
The timing and product couldn’t be better. Austin-area home prices hit an all-time high in April rising 6% year-over-year and the average time for homes on the market is 45 days, down from 50 days last year, according to the MLS. Inner 10 Capital managing partner Bryan Hancock (here with his daughter, Avery) tells us there's been a gentrification around downtown, which had been blighted. But, as those neighborhoods are cleaned up and the lots redeveloped into high-end housing, there’s a big demand, Bryan tells us.
The private equity firm is identifying urban development projects in Austin’s top 10 zip codes to develop more than 20 new homes this year. That’s what the $25M is for. The PE fund already has 43 single-family projects in and around downtown Austin through JVs. But, Bryan tells us Inner 10 wanted to broaden the pool of capital available. Crowdfunding became an attractive option once the Jobs Act loosened the securities laws and made it easier to solicit for funders (as long as you reasonably verify the investor’s credit). This opens up a new realm of investors, he says. He anticipates these investments to last about four years.
Bryan tells us one project was put on the market last week and sold in two days at the full asking price and that’s typical for these deals, he says. (It took us quadruple that amount of time to give away a couch for free.) Most of the homes they’ve developed generate multiple offers and are on the market less than five days. Every time we think we’re running into supply constraints, things seem to pop up, he says. The huge UT sports fan enjoyed the heck out of UT’s run in the College World Series, he tells us. He's been going to football and baseball games with his dad for as long as he can remember.