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Deidre Woollard: Hello, I'm Deidre Woollard, an editor at Millionacres and thank you so much for tuning into the Millionacres Podcast. If you follow this podcast, you know I love to talk about real estate crowdfunding and all of the opportunities it represents. It's really my goal for people to understand what real estate crowdfunding is and how it can be an accessible way to build wealth. When it comes to accessibility, I feel like there's no platform more well known than Fundrise. They are the ones we get the most questions about because they advertise a lot. I've been a Fundrise platform member for a couple of years. One of the things I really enjoy about the platform is their commitment to communication about every phase of investments. I'm excited to talk to Ben Miller who co-founded Fundrise in 2012. Welcome.
Ben Miller: Thanks for having me.
Deidre Woollard: Well, Fundrise is the like OG in this space. You started before everybody else and you've just continued to grow. How did you start at a time when there wasn't really a lot else out there in this space?
Ben Miller: We started right after the 2008 financial crisis. At the time, I've been disillusioned by the system. But basically the banks had blown up the country and then gotten bailed out. I said, there's got to be another way, right? There's got to be a different system. Can we basically have real people investing real things away from the street? That was the idea, but to make it possible I spent a year plus working with the SEC. Just trying to figure out how that could be, what's the regulatory framework? What's the way that they essentially would permit it? [NOISE] It's one of those things that retrospect everybody looks at is obvious. But until we did it and no one had ever done it before. I actually went to New York to meet with the number two law firm in the country, the head of their securities practice, the head of their real estate practice. It gives what we want to do. We want to democratize invest in real estate, opening it up, basically use Internet to lower the barriers. The head of the practice said to me, why would you bother with a little guy? She's used to having a billion dollar clients and stuff. It was the mindset before we came along. It's just like how people thought about it. I think that's no longer true.
Deidre Woollard: You came along really before 2012 and the jobs that you came along before any of the things that made crowdfunding more understandable. Before the SEC had even changed laws, right?
Ben Miller: Yeah. We were working with the SEC. I think it helped them understand it better, by seeing us do it. They've actually a property that we build that was the first deal ever. Real estate crowdfunded was down the street from SEC, and we turned into this restaurant. Actually that place is now a right of passage for people who go work with the SEC. They're always do taken there for lunch. I think it helped people go from theoretical to practice by actually seeing and I think we played a little part in that transition.
Deidre Woollard: Let's talk a little bit about the structure of Fundrise. Is it because you started so much earlier that your structure is a little bit different than some of the other offerings. Is it also because you're open to everybody with a relatively low entry point?
Ben Miller: Yeah. I think it's a combination of two things, like idealism and realism, if you will. On the idealistic side, why not fully democratize it, open up access, use technology to make it basically super low minimum invasive frictionless. If we can get the cost down to zero, we would. It's as low cost as possible, that the idealism. The realism is, and I've been doing real estate for 20 years, you need to have a structure that's flexible for when things go wrong or even when things go right that you can, write a check, you can make decisions. We moved to a fund structure or a pooled structure which is much more resilient to shocks and also, let's you basically drive more like a business. It's more like an operating business than like a static property.
Deidre Woollard: Interesting. One thing I've noticed with Fundrise is and one things I like about Fundrise is that your thesis keeps evolving with changes in the world. Build to rent, single-family rentals. You've kept moving as you've seen the market move. How do you do that and what goes on behind the scenes as you evolve your strategy?
Ben Miller: That's exactly right. My father is a real estate guy in Washington DC, somewhat well known real estate developer and he would always say, real estates always in motion. People don't see that they see a building and they think basically, it doesn't change. But it's always changing. If you think about retail, how much it changed in the last 20 years because of technology, because of e-commerce? If you aren't thinking about trends and how business basically is dynamic, you're going to lose value. Your asset will depreciate. Our thesis or our different strategies have, generally I think we've stayed a step or two ahead. Back in 2010,12,13,14,15 we were investing in emerging neighborhoods. Brooklyn to Manhattan, LA Arts districts versus West Hollywood. That was where the growth was. Then we shifted to move into like clouting multi-family, was about a change in people moving South to Texas and Florida. Affordability, better quality. I think better quality of weather and maybe cost of living. Those trends basically are our key to basically capturing value in real estate and that's a combination of basically data, good judgment and being able to execute on them. Having the actual technical capabilities to know how to build apartment building or invest in industrial e-commerce.
Deidre Woollard: You said your father is in real estate. Is that what led you to be interested in real estate? Did you grow up in it and is that why you saw that maybe it wasn't as accessible as it could be?
Ben Miller: Yeah. I think he gave me a longer view of it. He's at almost 80, so my father has been for a long time. People look at real estate and they say, this is how it's always been. But it's actually gone through a number of revolutions. It goes through revolution every 20-30 years. Before 1992 if you look at real estate in the '80s and in '70s, it was all individuals. There was show of no institutions like we think of institutions today, they were called syndicators. It was all raised by accountants and lawyers. Then in the early '90s basically the S&L crisis transformed the industry, institutionalized it. That's when Blackstone and Goldman and Starwood basically got introduced again invented as real estate investors in the early '90s, there's whole interesting backstory around that. People, if you have a broader understanding and the arc of history, you can both get a sense of what could be possible that people don't see, and also a sense of where things probably are headed over time.
Deidre Woollard: Yeah. I like that idea of the sense of history because one of the things that I've thought a lot about with real estate and how it's evolved lately is, tracking how REITS started from when they were founded in the '60s to now grown up fully part of the stock market. Everyone knows REITS invest in REITS but it wasn't that way a couple of decades ago. They just weren't seen as great investments. I feel like real estate crowdfunding is following that path where right now people know about it but they think it's risky or something like that phase.
Ben Miller: Yeah, it's funny. Actually I feel like, because of the family connection. I know people who are and doing their first REITS, their first op REITS and that was Taubman and basically, I think it was 19, can't remember what year it was, but there were some pension funding adviser asked the guy who invented the Wilshire index he said, "Well, is retailer an amount, anything? Do I even have to care about this? Whatever." Twenty years later it's trillion dollar massive amount of assets. What we're doing using the Internet to invest in real estate to me, I don't call it crab funding. Basically just how everything is going to be done. How everything is done, e-commerce, insurance, there's nothing that technology won't basically be the medium for, because there's a clearly superior to deal with an app and lower costs and better data. Probably at the end of this decade, we will actually be like one of the mainstream institutions. Even it's going to be settled like a funny ahead at that's how the evolution works. That brings like, when you become the mainstream, your challenge is, how do you innovate? How do you actually continue to grow? Because usually at scale, you move to a mediocrity.
Deidre Woollard: That's a good point. We'll talk about that nomenclature for a second because I understand your issue with real estate crowdfunding. It gets too close to crowdfunding which just sounds like GoFundMe or Kickstarter or anything else. Is there a better term to call it? Is it an investing platform? Is there something that you've settled on that encompasses what you feel like Fundrise slots into?
Ben Miller: I'm waiting for some journalists to your name, I've looked forward to it. [because I've talked to them and they say real estate credit fund and I'm like well, we've grown our 40 Act funds, mutual funds. They're registered with the SEC. They're the same fund structure or similar fund structure you see with like BlackRock or Vanguard. BlackRock and Vanguard raised money through Internet mostly too, so I'm like why are we not what they are? What's the difference here? It just happens to be that our mutual fund if you will is real estate properties and there's are stocks. But it's the same regulatory construct, and that we got there over time, we evolved to that more sophisticated, pretty serious regulatory burden. It's no joke being a 40 Act company but it's exactly what'll be called, hoping so. When I first came up with Fundrise, I called it online syndication.
Deidre Woollard: Okay.
Ben Miller: That didn't catch on.
Deidre Woollard: Interesting. One of the things I think with Bud Buy that's interesting is the accessibility factor. Accreditation is something that's been changing, you're obviously shifting your business a bit to meet the growth of the business. It sounds like how much is what the SEC does, like an impact for you and how do you think about it going forward?
Ben Miller: We we're in Washington DC. Even from the beginning, 10-years ago we worked with the SEC and figure out how do we do it, where they were on board, right? Now we're nine years later and we have investment companies. All of that innovation over these years required us to be closely connected to the commission. I would say like we're probably corresponding on Edgar and with SEC like daily. It's critical to our business and it's core because it's always been about everybody should be able to invest. There should be no artificial barriers and that means is highly regulated. Our investment minimum over the last number of years has come down basically we have investors who have invested in millions and investors to invest like $10 minimum and $10 minimum is because the software doesn't really care. It's basically a zero marginal costs once it bits our zeros and ones. That software basically is agnostic to how many people it is. That's like been always part of the core aim to use software to break down the barriers.
Deidre Woollard: Is Fundrise open to institutional investors as well or is it just all retail investors that are some large, some small?
Ben Miller: I've worked in institutions I've had them as partners before I started Fundrise. I basically have a team view of institutions and it is like I think that there's a lot of middlemen, a lot of bad incentives. There are obviously great institutions out there but what they want from you is different than what our individual wants. Individual wants good performance and transparency. Institutions like at their worst but even quarter their existence is they want CYA. They want not to be able to like the person takes career risks, they can't get in trouble. It creates a different incentive structure. It should basically be avoided institution as a client for our company.
Deidre Woollard: That makes sense. Talking about Fundrise's structure a bit, I know that you've had the E-Reads which is just how it started and then there's different E-Reits that are invested across different properties. Can you explain a little bit about how that works and the ways in which you are evolving that structure.
Ben Miller: Our investors basically like we try to offer what we try to build for our investors, are real estate strategies. Not like you're picking, I think there's building and third, in Maine and Dallas is where you should be like that. I think that's not really how most people want to invest. Where they want to invest in is a certain strategies that deliver outcomes that they're looking for. At the highest level, we have strategies that produced income or yield and strategy produce long-term high-growth. Underneath of that you basically have like so what's high growth these days? Mostly residential in the Sunbelt, either as build-for-rent, single-family homes which I think is basis of the future of real estate is single-family housing for rent. It's basically become the most dominant part of real estate for the next 10 years to outperform. I think we're the biggest BFR, build-for-rent buyer in the country. We're just completely dominant in that space. Actually, institutions that were competing with essentially like Kent we've displaced them completely. It's like not really they over they understand that yet, but it's like I know that because the people who work there coming to me saying while I might work for you because I can't actually buy anything that I want because you've already basically there before us, basically have control for the dominant player in the pipeline. That's basically the ideal outcome. The ideal outcome is you have the right strategy, best technology, the lowest cost and you're dominant operator in the space. That's basically like it's not ideal, it's not a building, it's about an operating platform that you can have huge leverage and it can only be achieved basically underneath like what we've put us a fund or a strategy.
Deidre Woollard: Interesting. For Fundrise investors, someone's thinking about Fundrise, one of the questions that we've gotten a ton is Fundrise versus publicly traded REITs and how people should be thinking about the two options?
Ben Miller: Yeah, we get that question all the time too. There are a few different ways to answer that because I think it's a deep question. One, what's the difference between high-tech free IPO companies and late-stage IBM mature public tech companies like mostly the public markets are mature companies go, there're usually lower-growth. More what the analysts on Wall Street wants is predictability. [NOISE] That basically, generally has had lower returns. Last few years have seen some interesting dynamics industry because of, I think all the money printed. But to put that aside as maybe an aberration, say, public markets are where mature companies go and private markets are where basing them on higher growth, higher risk, higher return. That's just the fundamental difference and that's if you look at the reading industry. Most of the returns have come from the newries, cell towers, e-commerce logistics. With only a handful of public reads I think our actually really growth stocks, the majority of them are actually maybe a utility or something.
Deidre Woollard: I think that's a fair assessment of things. Let's take a quick break.
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Deidre Woollard: I'm back with Ben Miller and we're talking about Fundrise. I wanted to get into some specific transactions that caught my eye recently. You just talked about build-to-rent. One of the things I noticed last year was you had I think the first community deal with D.R. Horton, which I think kicked off the trend of build-to-rent. As you mentioned earlier, there's been this scramble right now with build-to-rent at the same time that you've got individuals looking for homes. Homebuilders seem can't build fast enough and they're facing supply-chain issues and construction issues, and price of land is going up. How are you looking at all of those issues? How big do you really think build-to-rent can get? I mean, you said before you think it's the future.
Ben Miller: Yeah. Yes. I mean, there's so many interesting things in that comment. Let's talk about the institutional investment side and the effect on homebuyers. Every institution wants to own single-family and built for rent. Mostly they're buying existing single-family. It's not like they're building new homes. We felt like our customer wants us to basically expand the pie, doesn't want us competing with the homeowner, so we went out and focused on build- for-rent. When we bought the D.R. Horton deal, basically we were like, somewhat we came out of nowhere. At the time people are like, "I wonder if they're overpaying." Now looking back a year, we looked like the smart money with rent growth and occupancy on that property you're like off-the-charts, 100 percent occupancy. We killed it on that investment. Basically, I think that the most fundamental level, the homeowners is competing with institutional money for housing. Institutional money is competing with the bond market for yield. It's just like they're just operating on two different levels, two different worlds. That dynamic, I think it's basically until we move into a different interest rate environment which I think is, I'm not sure how to call that one. This is here to stay. Then on top of that basically we're just under housed. We're just not only housing in the country. If you people use big numbers as million, that's houses that need to be built. But really people are moving to Buffalo. The growth is happening in Texas and Florida, Phoenix and that was actually much more concentrated where the housing need is and where the growth and demand is. I think that there's like millions of houses needs to be built in these areas. I think that that's literally going to happen. I know build-for-rent is basically changing how the homebuilding industry works because it's bringing a new part to this homebuilding businesses. Because before they built for home buyer and you have no idea what prices on homebuyers will be like a year from now. But you have a stability in your business model, if you have a partner who basically will buy with you and rent. I think it just derisks the homebuilding industry.
Deidre Woollard: It's amazing to me because you think about the great financial crisis, 2008 to 2011. Then was no real backstop for homebuilders. They've built and then there was no homebuyer who wanted them. I used to live in Los Angeles. Out in Lancaster, you had the pads, homebuilders just stopped building in some of the excerpts. Now, if there is another slowdown in the home buyer demand, there's going to be Invitation Homes and the iBuyers and so many different other solutions that just didn't exist a decade ago. It's to really wild to think about.
Ben Miller: I've been trying to explain this to reporters who call me what the stuff it is. It creates a floor for home sales that didn't exist. As you said, no, wait there's no floor or basically just the prices could go to almost zero. Some home, I was in real estate back then too. You can look at a 300 unit single-family house development and literally get to a negative land value. This is worth negative $7 million. That's how upside down it was back then. Now, the nature of SFRs, single-family rental, it's just created a floor on the homebuilding industry. The homebuilding industry as a result, is in transition from a binary industry, either boom or bust, to a different, a more analog industry. I mean, I'm not good at buying stocks, but I feel like the homebuilding industry maybe mispriced by the street as a result of this fundamental change in their business model.
Deidre Woollard: Yeah, I would definitely agree with that. I wanted to talk to you about this project that you actually are doing in Los Angeles. You're taking on a whole neighborhood which I find fascinating. What's Fundrise doing with the West Jefferson neighborhood?
Ben Miller: I mean, this goes back to where we started. We have been focused on emerging neighborhoods. It's less of a focus now, but definitely was a part of our core strategy and this neighborhood is part of that, which is that you go to where it's really expensive, where everybody wants to be and then you go one neighborhood over. In LA, you go to Culver City, super high priced in real estate. One neighborhood over, which is West Jefferson neighborhood. Difference was like a $1,000 a square foot versus $300 a square foot. I like to say that affordability is gravity. It just pull people over with you. We just bought 25 buildings in that neighborhood and brought in restaurants and video streaming companies, agencies. Essentially now that neighborhood like CoStar, which is how people find space. It's starting to treat West Jeff as part of Culver City. It's just overtime. Difference between Williamsburg and Manhattan is almost immaterial from a pricing point of view, you close the affordability gap. That's how you make money. That's one of the ways to make money in real estate.
Deidre Woollard: Did you get any concern from the neighborhood about gentrification and things like that?
Ben Miller: No. I mean, I have a lot of experience on this topic. Is an industrial neighborhood. There really wasn't housing. There's no displacement. We aren't building much housing is mostly there's a certain type of tenant, which is a single-story, creative office space. For a lot of which basically the pandemic's driven more demand for people who want to get out of office towers in to old industrial building with bow. Bow wood like ceilings and have their own space, be outside. We focus on a type of redevelopment that doesn't have a lot of the issues with gentrification. We did also, we opened up a black-owned bookstore in the neighborhood which was part of basically making it a place. Specifically didn't have much character. It wasn't like a vibrant part of it if you drove by it before. I think three years from now, if we do it really raises [inaudible 00:29:41] Abbot Kinney was. Just a really cool street with have really high rents [NOISE] and a great sense of character.
Deidre Woollard: You just mentioned that commercial office switch from towers to different types of real estate. Is it the same thing on multi-family too, that there's just been this run on Garden Style Apartments. I know that you've been looking at buildings like that. Do you feel like that's a pandemic response or is that an ongoing shift?
Ben Miller: That's a really good point. We own something like 20 thousand multifamily units like that. We made it just like large investment on that thesis and that thesis is now playing out. We're seeing rent growth and just like double-digit rent growth. Everybody wants to buy it from us. I think we're going to see good outcomes from that. We got to the ahead of it. Part of the magic, it's ahead of the institutional money. Institutional money is actually really slow. They don't want to do anything first. They want to basically know it's proven out before they jump in and they like, that's great. Because it's not that hard, to be faster than a slow-moving giants. We got there first [NOISE] and then you sell it to them and then hopefully at the close to the peak as possible. How long that's sustainable? That's a good question. I'll give you some numbers just so you can understand when we're buying. This is Class B multi-family housing built in the '80s. That's what basically essentially mostly it is. We would buy it for $60,000 a unit, $80,000 a unit. You put in $10,000 renovating it. Now, three, four years later, people are offering to buy for $250,000 a unit. I mean, just huge appreciation. What happened is that the price differential between new housing and old housing this almost close because you can make it more or less new for small amount of money, $15,000 a unit for less. That strategy, it's played itself out. We stopped buying Class B multi-family. We only started buying Class A multi-family. That's basically saying, well, if I'm going to buy housing and apartments in Austin, do you want to pay $250 a unit for new construction or $225 a unit for housing from the '80s? If that doesn't make sense let's just buy Class A, and so we did, and then that went to 300. Now we're like, the problem is, there's so much money pouring into anything with yield is pushing us where we go, we just say okay, we need to build. We can't just harvest yield. That's like becoming a greater and greater part of our strategy, and I think you can build for a lot less than you buy, a lot less. Let's say you're getting numbers probably build for $200,000 a unit, and you'd have to buy for $300,000 a unit. That's a huge delta, as big as I've ever seen. You build. That requires a whole different amount of operating capabilities.
Deidre Woollard: Requires more time.
Ben Miller: Yeah. If you've ever done any large-scale development is very grindy.
Deidre Woollard: That is a good way to put it. Do you feel like we're overbuilding with luxury apartments? It seems like there's a lot of high-rise towers being built. There is a lot of concern about, "hey, we don't have enough workforce housing, but we have all this high Class A that we might not need."
Ben Miller: Yeah. I think there's a few different ways to cut that question. Fundamentally, there's no such thing as new workforce housing because the cost of new construction is over $200,000 a unit. Workforce housing is usually housing from the '80s, housing from the '70s. That's just the nature of housing. It's like saying a used car versus a new car. This actually is a workforce, new car. It's new car versus used car. Used cars are $5,000 and new cars $30,000. The press always says, why don't they build workforce housing? I'm like, basically it's impossible. But then on the question of, are we overbuilding it? In New York, we got out of New York. We stopped investing in New York in 2016. We heavily invested it up to 16, and then it just got too affordable. In fact, they were overbuilding, $2,000 a square foot for a condo, and they overbuilt in New York, and now they're really in trouble. If they were in trouble before the pandemic, are they going to overbuild in Austin? I don't know anywhere close to it. There's just too many tailwinds. We didn't talk about remote work and remote work technology. We didn't see that coming back in 2018 or 17 or 19 when we were buying in Austin or Tampa. But if you can live anywhere, you're not going to live in whatever, DC, you're going to move from DC to basically places that are much less expensive and have great weather. That's driving the residential market in ways that I think are secular, like long-term driver.
Deidre Woollard: Let's talk about another overheated area where investor money is going and that's industrial and logistics. You touched on it earlier. It's just been nuts. I mean, price per square foot in industrial just keeps getting out of control. What are you thinking about that space now? Is it something you're investing in, or it's getting too overheated for you?
Ben Miller: We are investing in it. I mean, mostly we need to go to new construction, build, there's not enough supply. There's some interesting dynamics around it that I think the price per square foot is less important in that situation because Amazon or Shopify, whoever your user is, they get so much leverage out of that building outside DC or outside wherever, Charlotte, that you need to be thinking about supply. It's not like affordability is for a homeowner where there are certain limits. There's no limit Amazon can pay for the right building in the right place because they have technological leverage. It's like data center. You can't just look at it on a per square foot basis. It is very difficult to bring new supply into Washington DC. There's just a very limited amount of industrial space, and they're mostly losing industrial zoning as people convert it to residential, like we did in LA. We're converting industrial space to creative office and restaurants and stuff like that, and residential. Basically of declining supply, like a virtual demand because of technology. I still think there's good fundamentals, but the actual when you're actually in an auction dynamic for a sort of Class A industrial building, the price is absolutely ridiculous. We went in for a bid, the whisper price was $35 million, and it sold for $45 million.
Deidre Woollard: Ouch.
Ben Miller: Nobody knew why. It was just crazy. You don't want to do that. I can see that the price is out of control, but there are also fundamental drivers. Rather than what I was saying an office in New York two years ago when it was just going to the moon, I'm like, rather is there really a same fundamental drivers for offers in New York? The affordability problem is like a headwind.
Deidre Woollard: Especially with industrial right now, one of the things we've seen is, there's Austin obviously, which you mentioned, and Charlotte, which you mentioned too, the secondary markets where people are moving to, and there's not enough industrial space at all, and then you've got Amazon building airports trying to solve this problem. You've really got whole industrial markets springing up that didn't even exist before. It was a conversation previously about last mile warehouse. Now it seems to be warehouse everywhere.
Ben Miller: I can't remember what the numbers were, but x number of retail space in the country, some like 300 million square feet, it was some number. Essentially, that will end up 100 million square feet of industrial. If you just say like for every three square feet, you lose in retail. I think you end up with one square foot industrial. Some ratio I can't remember off the top of my head, so that's what's been happening. Then another driver, we are in the market. Amazon is 50 percent of the industrial e-commerce market. If you're a counter party, that's a difficult negotiation because it's a one-sided power dynamic. When you get underneath it, like what's the supply constraints in Charlotte? Who are the tenants? Can you get zoning done? Is actually a lot of time. Neighbors don't want industrial in their neighborhood. They fight you. Building new supply, there's tons of value in doing it, but it's challenging. Like the negotiation for lease, the building of it, the location. That's why I still think there's really strong fundamental drivers. You want to have, just capture it as like affordability as you can.
Deidre Woollard: Yeah, that makes sense. I really enjoy a Fundrise app, I get the alerts a lot. One of the things I was wondering is how you get all the information? It seems like you must have a big team to do that. Is it something that's really important to you, is that idea of communication with participants, with Fundrise members?
Ben Miller: Fundrise is like 200 people now, which blows my mind. I still think we're seven people and my dog in little Alcove. But we're obsessed with the customer. Basically like, we have this company values, or every company has them. Our first one in our main one is investor first. We put the investor first. People will do things that are absurdly, just dramatic, just to deliver over the investor. As an example. I think it was in Dallas, some homebuilder delivered us a half a dozen houses with no refrigerators. We can't get refrigerators. We were like, so somebody flew to Dallas, went to a Costco, bought six refrigerators and took them to the houses, and now we have six houses. Basically like, I guess I was in the middle of digression. But the point is that, what's different about us and something that people don't appreciate the power of, is we're vertically integrated from you holding that app to the software that does manages all the capital flows, all the information to the fund, to the operation, to the property. There's nobody in the middle. The information, the people, incentives are all one. I think over time, that is going to be what it should be to drive better performance, more information, better transparency, just better outcomes, and it's what you saw like Amazon do, Netflix do, where they basically completely vertically integrated to deliver for the customer, and that's the Ethos, and you see that in maybe, in the consumption of the app. But over time, I think you'll see that as we write more and more software and do more and more things that just, you can't do with people if you're an old fashioned real estate company.
Deidre Woollard: Interesting, what are the things that I've seen, I don't know if this is just a perception thing, but it seems like deals are moving faster, and one of the things we've noticed with Mogul, our premium service is, things are being sold early for some of the crowd funded deals that we had with our other platforms. Is this something you're seeing, that there's so much capital that deals are transacting more quickly?
Ben Miller: For sure. We saw it on two of our strategies. We've made a lot of loans and we gave a lot of Mezz or secondarily, we felt like preferred equity your Mezz loans to multi-family we had, three or $400 million of it out. It was great during the pandemic. In March 2020 when everything collapsed and you were like, "oh my God, what is going to happen?" Those loans were just pristine. They never missed a bit, they always paid. Then the economy came roaring back and everybody is paying them off. Just paying them off.
That's the nature of why am saying real estate is so dynamic. You have to go ahead and if the market catches up with you, you harvest. It pays off or you sell, because once it's at maturity, is fully baked, there's not that much value creation left and you move on, and it's not emotional about it. I think that's basically what's happening, and the hard part is not so much harvesting, something that we're right about. But it's the hard part is making sure that you get the best price and then you invested the next thing.
Deidre Woollard: Well, I got to ask, what's the next thing?
Ben Miller: Build for rent. Here I'll give you example. We did a $300 million financing Goldman Sachs for our build-for-rent portfolio. It's the only bill for rent at scale on the street. Literally, if we go do securitization, and we talked to investment rating agencies, they've never seen it. They have never seen $0.5 billion portfolio of bill for rent, and the bill for rent was so like, where we're doing it, is we build 50, 100, 200 homes in one place. You get the best of two worlds where you like one, a home is the best consumer product. If you are a consumer, you want more light, backyard, more space. You want all these things, you can't get it from an apartment. As a consumer product or our app, it's a consumer product. We build something people want and you build it with 100 homes so it operates like a multi-family property. The cost of turns, the cost of renovation, is all these scale benefits, and we're basically achieving both those things, and no one's ever done that. We're dominant in the space, so I just think we're going to get more dominant and deliver I think, pretty good results for people because of the tailwinds around. If you're going to work from home and you're nearly going to the office once or twice a week, you're going to move further out. You're going to want to house, and you probably you'll rent. It's just so fundamental to I think the megatrend underneath of growth that we got there first and then we're like, enabled to solidify our position in a way that a year or two from now at the institutional investors, at some point they start to like, they want to understand how we did it. Well, you're supposed to be crowd funding. You're supposed to be the kids. This is not how it's supposed to work. Well, we're supposed to be the big guys. You're supposed to basically be irrelevant, and I am hoping that basically they continue to underestimate us long enough, that we basically get there with software that they so can't do anything about it, once we're there.
Deidre Woollard: Well, that brings me to my last question then which is the future of Fundrise. Sounds like you're moving fast here. Are you looking at some of the things that are out there right now, like emerging models have tokenized real estate property trading via NFTs. Is there anything like that that catches your eye or is that fringe for you guys?
Ben Miller: Yeah, we are focused on the application of technology to real estate finance. It's just incredible how much there is left to do. Crypto it's tricky, because you say, there's two reasons why I always say, what's the problem you're trying to solve? Why is that problem have to be solved by crypto? Mostly, haven't seen that many technological problems solved by crypto to decentralize it. It's like no, you have to somebody driving the decision-making. Who is going to go pick up the refrigerator and get it to the house, if it's decentralized? It's an operating business. Real estate is an operating businesses. Google is an operating business, not like a brick of gold. I don't know how to leverage crypto, and as you probably know Gensler, SEC, crypto is about to get completely disrupted by the regulator. That's imminence, and I think that out of that wreckage there should be some really interesting opportunity. But in the meantime, we use software to get data out of the properties aggregated in sophisticated ways. Look for insights, that kind of stuff, it's not that fancy, but it really delivers good results.
Deidre Woollard: Any thoughts on PropTech in general, things like digital twins, adding more sensors to buildings. Is that something that you look at as well?
Ben Miller: We have a technology initiative coming that we haven't talked too much about. What's unusual about us is that we actually have 100 software programs on the real estate people. Usually you're, 100 miles of people or 100 software programmers. They don't really understand each other and they know how to solve the right problems. We actually started investing in PropTech companies. We started looking for how we can leverage our expertise and our technology and our scale to do that, so I'll give you an example. There's a company called Saltbox. They are the WeWork of industrial. If you sell on Etsy, if you're selling e-commerce and you need 5,400 square feet to deliver 10,000 units a year, you can't get that from industrial building. You have to rent 200 square feet. They've created this WeWork model where there's a much clear value proposition and there's a huge premium because you're not paying for square footage, you're paying for a service which is to fulfill your logistics needs of your business. They basically did that, we invested into their company and we're rolling out. The goal and motion is to be the real estate underneath of all of their buildings. We own it, build it out for them, scale it across the country, and that's like a unique partnership that we can do, that thing is not so common.
Deidre Woollard: Well Ben, thank you so much for your time, this was really fantastic. A reminder to listeners, you can learn more at fundrise.com. You can always email us at media millionacres. Stay well and stay invested.
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