210 Bill Bedell, Investor

Investing in Infill

There is a big difference between wanting to buy a house for yourself and to build it or renovate it and investing in somebody else's deal.  For Bill, the whole idea of infill whether it is him or someone else doing it is sort of an underappreciated economic opportunity.  Being fresh out of graduate school an in his first job, it is kind of absurd to think that he would be funding his own real estate deals unless he was in the business and was a professional real estate developer.  Instead, investing in a deal on the SmallChange website has given Bill a way to make a little bit of money based on what he describes as his ‘armchair understanding of how valuable infill can be’, and it also provides him with a good chance to learn a lot about the infill process itself. The architect developer on the deal Bill invested in, Jonathan Tate, has been very good about filling the investors in on what the plans are, whether there are legal things that need completing, financing mechanisms and so forth.  For Bill, it is an interesting educational process as much as it is an investment.  A novel take on the oft-cited learn-by-doing approach.

Socially Conscious Investing

Adding further value to the transaction for Bill is that a primary motivator for him is that the deal has a kind of a social conscience in that it is doing good for the community in which it is located.  This is part of the return to Bill that cannot be measured in monetary ways.  Had he wanted just a financial profit, he could have just as easily picked up a real estate REIT that went out and built greenfeld houses in Arizona somewhere.  If making money were the primary driver there are better ways to do it like, perhaps, investing in the stock market.  Bill is expecting around a 10 percent return overall and the project will take around a year to complete, maybe a bit longer.  For him, the return is comparable to what he would get on the stock market, ‘but way more fun!’

But for socially conscious investors like Bill, the investment was as much about the project and the almost the aesthetics of the kind of building of which he wanted to more built.  He has invested in two beautiful little houses that he himself would love to own but cannot afford today.  He longs for the day when there are more homes like the ones he has invested in and by helping Jonathan build the models in New Orleans.  Bill sees it as being in his own self-interest in a way because, perhaps, a home like that will be available when he can afford to buy one himself.

Researching the Deal

To figure out a market that is thousands of miles away from him, Bill did his homework. He studied all the documents about the deal on the SmallChange website and that are readily available to anyone with an interest in investing.  He went on real estate sites like Zillow and looked at what is available on the market right now and what that has to do with proximity to transit and jobs.  He likes the neighborhood where the deal is situated.  You cannot find a single family home in this area because everything is either a duplex or a mansion so the only way to buy and live in a single family home in the area is if you are willing to spend a few million dollars.  So the little ‘starter homes’ that Jonathan Tate is building and that Bill invested in really fits in this niche of being highly desirable detached product in this neighborhood. It is high quality construction and small but still something that a family could afford.