Real estate has long been viewed as one of the best investment opportunities for those looking to build their wealth. In fact, 89% of investors have some interest in investing in real estate, according to a Better Home and Gardens Real Estate survey. While it has traditionally held a higher barrier to entry than most other types of investment, considering the steep buy-in, a new nonprofit is changing the narrative.
Mercy Corps is a humanitarian aid agency that has stretched across the globe since its founding in 1979. It has operations in many of the most war-torn and desperate nations, including Syria, Democratic Republic of Congo, and North Korea. But it is their domestic division, Mercy Corps Northwest, that is responsible for a shift in the real estate market.
The Northwest Division is dedicated to uplifting low-income families and breaking the cycle of poverty in the Pacific Northwest. Their latest approach to that takes the popular real estate investment trust (REITs) and flips it on its head.
Traditionally, a REIT allows investors to pool their resources and buy premium real estate. Both the profits and the revenue from the rent are split among the investors. The catch is that most REITs require a minimum investment of $200,000, which prevents a majority of people from being able to invest with a REIT.
But Mercy Corps Northwest’s new community investment trust program allows investors to contribute $10, $25, $50, or $100 a month towards shares in a more inclusive version of the REIT.
The goals are threefold, according to Mercy Corps Northwest’s website. The first goal is to provide education about how to budget and invest money. The second is to actually facilitate small investments spread out over a long span of time. The third is to provide tangible rewards: an annual dividend that is based on the cash flow of the real estate property.
The first piece of real estate that has been purchased is a strip mall which cost a total of $1.2 million. The strip mall is located in a neighborhood that has become a haven for renters who have been displaced by gentrification. In order to ensure that the CIT be true to its name, investment is only an option for those who live in the neighborhood or nearby zip codes.
The idea is to give people stakes in the neighborhood in which they are living and to better foster a sense of community. With home ownership becoming increasingly less feasible for people at the lower end of the economic spectrum, this project offers people the chance to have some ownership of their neighborhood.
“What we heard early on is that’s exactly what people want,” John Haines, Mercy Corps Northwest’s executive director, said to Nonprofit Quarterly, “Even if you’re buying stock in a company with a store down the street, that’s a little elusive. That’s a little different than knowing, ‘That building is mine.’”