Growth of any market requires innovative approaches to problem solving. So when Tore Steen and Darren Powderly noticed that technology was changing the investment market – and that there was a need and a method to garner investments – they decided to get creative.

To create their solution, the two men took an existing example and then added some twists.

“Charles Schwab is kind of the great market example of e-commerce,” Steen said. “We’re taking parts of that approach and applying it to a very select group of qualified investors, and an equally select group of projects.

The end result was CrowdStreet, which uses the now-popular trend of crowdfunding to fuel investments in real estate.

The CrowdStreet approach is to qualify the investor and the developer to determine the best of both. Project details are readily available on the CrowdStreet website, and the investment opportunities have the same integrity as the investors.

“We’re building security in our projects,” said Steen, who also acts as CrowdStreet’s CEO. “By carefully selecting the projects we participate in, we can assure clients of the strength of the project. … Building a client base by crowdsourcing makes it easier for them to invest, and that makes it easier for projects to go forward.

CrowdStreet’s studies show that most investors watch a minimum of two minutes of the videos offered for projects. Offering viewing by project groups instead of individually allows for more efficient marketing. The entire process has been simplified to allow investors to complete the process entirely online if they so choose, which many do.

So far, the CrowdStreet team has obtained investment funding on five projects, including a multifamily one, Steen said. The company has earned mentions and attention from Huffington Post, the Wall Street Journal, Globestreet, the National Association of Realtors, Entrepreneur and the National Association of Real Estate Investors.

This past September CrowdStreet also secured $800,000 in seed capital, an infusion of money that the firm is sinking into adding engineering talent and boosting marketing along with other outbound efforts.

“It’s a new avenue into the real estate investment market,” Steen said, “and it’s transforming the industry.”

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Portland State University architecture students are raising money to build a “parklet” on two parking spaces in downtown Portland.

The students, PSU‘s Institute for Sustainable Solutions and the SoMa EcoDistrict Steering Committee have launched a crowdfunding campaign to complete the project this spring, PSU assistant architecture professor B.D. Wortham-Galvin said. The goal is to raise $15,350 by Jan. 31. Donations will cover the costs of building materials and city fees for lost revenue from the former parking spots where the small park will be built near the intersection of Southwest Fourth Avenue and College Street, she said.

Wortham-Galvin last year worked with students to design the park and choose the best location. Approval was granted through the Portland Bureau of Transportation’s Street Seats program to occupy parking spaces on Fourth Avenue in front of a block of food carts. In the spring, she plans to teach a course to finalize the design, construct most of the components on the PSU campus and later assemble the park on Fourth Avenue over a weekend.

Ideally, the park will be complete by this summer in time to accommodate food cart diners, Wortham-Galvin said. Currently, the area has few public seats; many customers walk back to campus to eat, she said. Plans call for the park including high tables and stools, low benches with tables and a U-shaped bench.

“It really is meant to be a community gathering space for everybody,” Wortham-Galvin said.

Project donations can be made at .

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Ankrom Moisan Architects associate Blaine Burris knows that designing a McMenamins hotel often involves stepping back and letting a team of artists help transform old buildings so that they can accommodate new uses.

“As far as atmosphere goes, they pretty much go the full nine yards,” Burris said. “A lot of what we do … it’s like assembling an armature and creating opportunities for the artists to fill in spaces.”

A $23 million project to turn an 83-year-old ex-middle school in Bothell, Wash., into a 72-room hotel with a brewery, a restaurant, bars, event spaces, a movie theater and a pool, was no exception for Ankrom Moisan staffers who have designed dozens of locations for Portland-based McMenamins Inc. The challenge was finding a way to reuse the five existing Anderson School buildings while staying to true their original intent, history and connection to the surrounding community, said Mario Espinosa, an Ankrom Moisan senior associate.

“The idea is all about the locale,” Espinosa said. “If it’s a school, there are things that make it significant. You’re not restoring. You’re repurposing it.”

Crews from general contractors Andersen Construction and Pacific Crest Construction recently started construction on the 5.4-acre Anderson School site along Bothell Way Northeast, slightly north of Washington State Route 522. To close a funding gap for the project, McMenamins co-founders and brothers Mike and Brian McMenamin raised $8 million via crowdfunding.

Plans call for converting the W.A. Anderson Building – a three-story, 55,000-square-foot former middle school built in the 1930s – into a hotel. The 30,000-square-foot former gym will become a conference center, an event space and a movie theater; a 33,000-square-foot building that once housed shop classes will become a brewery; and the 28,000-square-foot ex-cafeteria will become a restaurant and lobby.

The project also involves transformation of a 26,000-square-foot former community pool building into an indoor tropical oasis, complete with a heated soaking pool, real palm trees and a mezzanine-level bar in place of bleachers.

“We’re going to shallow it a bit so it’s not an exercise pool, (but) just a lounging pool,” Espinosa said. “The idea is to take that Olympic look of the pool and turn it more into an environment.”

The design team toyed with the idea of removing the roof to create an open-air pool, but eventually decided to leave it, Burris said. Instead, the renovation will give the building a more open feel via additional wall openings and skylights. Bamboo accents and tropical plants will enhance the island-themed atmosphere, he said.

“We’re working to soften … this to break down this monolithic look to it,” he said. “The idea is to have that feel of authenticity.”

The five existing buildings will surround a central courtyard with a covered walkway around the perimeter and the only new construction – a 360-square-foot “shed” bar.

Most of the existing buildings were constructed in the 1960s and ’70s and have a strictly utilitarian look, Burris said. This makes the ornate exterior – including a brick facade and large windows – of the 1930s Anderson Building stand out, he said.

“The outside was the jewel,” he said. “We’re preserving it.”

Although the Anderson Building will retain its original facade, the interior was gutted in a previous renovation into office space. To convert the building into a hotel, crews will remove drop ceilings to restore the original 12-foot height in the rooms, and use other touches to remind visitors that it was once a school. The large former classroom windows will remain untouched.

“It looked like a modern office building,” Mike McMenamin said. “We’ll bring it back to what it looked like.”

The idea is to acknowledge the building’s history, which will be enhanced via historic photographs, paintings and murals on the walls throughout the complex telling the story of the former middle school from local residents’ perspectives, he said. McMenamins staffers are in the process of researching the former school’s history, and 16 artists from the Bothell area have been hired to help create 300 to 400 pieces of artwork.

“We’re going to tie it in from an artistic standpoint; that’s the beauty of it,” Mike McMenamin said. “There are thousands and thousands of people that went (to Anderson School). It’s great.”

This community involvement is what keeps design for McMenamins interesting, Espinosa said.

“It’s incredibly engaging with the community,” he said. “To me, that is the whole purpose of McMenamins. (Each place) has its own feel to it because they are all about that, all about the community.”

The Anderson School McMenamins is scheduled to open in December 2015.

McMenamins Anderson School

Location: Bothell, Wash.

Cost: $23 million

Construction start date: November 2014

Anticipated construction completion date: December 2015

Owner: Anderson School Properties LLC

Developer: McMenamins

Architect: Ankrom Moisan Architects

Engineer: Froelich Engineers

General contractors: Andersen Construction and Pacific Crest Construction

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CrowdStreet, a Portland-based real estate crowdfunding business launched last year, on Tuesday announced receipt of $800,000 of seed money from several investors.

Green Visor Capital and Seven Peaks Ventures were the main contributors, CrowdStreet co-founder Darren Powderly said. However, money also came from Portland Seed Fund and several angel investors.

“We have two customers: the developers and the investors,” CrowdStreet co-founder Tore Steen said. “We’ll use this money on hiring engineering talent, increasing marketing campaigns and other outbound efforts.”

CrowdStreet uses an online platform to market projects to investors around the country. It also streamlines the process of verifying eligibility. Steen and Powderly envisioned opening real estate investing – a venture traditionally reserved for the ultra-rich – to a group of accredited investors of more modest means, and they’ve done just that.

To qualify as an accredited investor one must have either an annual income of $200,000 (or $300,000 for a family), a net worth of $1 million or trust assets totaling $5 million.

“I like to think of this as the democratization of real estate investing,” Powderly said. “This is the first time people who can’t write a check for $250,000 can get access to institutional-quality real estate investing and do it for $10,000.”

CrowdStreet requires a minimum investment of $10,000, but developers can raise the minimum investment at their discretion, Steen said.

“I had the idea and became passionate about opening up real estate investment opportunities to those types of investors,” Powderly said. “I thought it was a good idea then; now I know it was a good idea. Before CrowdStreet, it would take phone calls, emails, lunches, meetings over cocktails, golf weekends to get investors on board. This method uses a combination of technology and world-class customer service.”

Since introducing its first investing opportunity earlier this year, CrowdStreet has raised more than $2 million for two projects. The first, an assisted living senior housing project in Bloomington, Ind., exceeded its $1.5 million funding goal in just four weeks.

“It was like a rookie getting into the batter’s box and hitting a home run to be that successful in that short of time,” Steen said. “I give credit to Darren.”

More than a year before the opportunity was presented, Powderly was out talking to potential investors, building a base for when CrowdStreet was ready to start choosing projects, Steen said.

“There was no playbook, no instruction manual,” Powderly said. “We were writing it as we went, which was very exhilarating. We hit the sweet spot with what’s attractive to investors.”

Powderly said he came up with the idea in 2012 after the downturn in the real estate market.

“I couldn’t write a check for $250,000, but I could have written some for $10,000,” he said. “I wanted to give other people like me who were looking to add to their portfolio a way to get into the real estate market.”

Jeff Chase, from the Portland area, has invested in CrowdStreet projects. He said he learned about the concept before the company started, and was ready to invest when it did.

“I like being able to go on the website and browse through the projects,” he said. “It’s a low-pressure environment and offers diverse projects. It’s nice to be able to invest in an office building in Texas and a retirement community in Indiana.”

Chase said he is confident that projects will succeed because of the thorough research performed by Steen and Powderly before they present opportunities to potential investors.

Powderly said CrowdStreet takes on about one of every 20 potential projects they find. Though the company in April was considering a 100-unit student housing complex in Eugene, Steen said the team decided against it.

CrowdStreet currently is considering about a half-dozen projects in the Portland area, Powderly said.

“We’ve got a ‘ground up’ multifamily housing development and a shopping center we’re looking at,” he said. “We’re also considering an existing apartment building and looking at taking time on recapitalization of existing projects.”

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The doors to real estate investment are opening wider.

Deregulation by the U.S. Securities and Exchange Commission last fall has allowed Portland startup CrowdStreet to become Oregon’s first real estate crowdfunding company.

“What this does is open up new access to funding sources that traditionally have been closed, or were very exclusive and private,” said Tore Steen, a CrowdStreet co-founder and its CEO.

The new rules are bolstering similar U.S. startups, which together could significantly alter the way development comes together. On Monday, CrowdStreet launched and presented for a $13.3 million transitional- and assisted-living development in Bloomington, Ind.

“(Traditionally), if a developer wanted to raise individual equity it was through their own private network, and it was usually in one-on-one conversations,” Steen said. “By using a crowdfunding platform like CrowdStreet they can get access not only to investors in their own location, but also investors across the country who might have an affinity for that location or that property type.”

CrowdStreet’s first offering is spearheaded by Indiana-based developer Mainstreet, which specializes in concierge-based health care facilities. The company has reportedly developed more than $200 million worth of such facilities, and has close ties to a large, publicly traded real estate investment trust named HealthLease Properties. Access to capital isn’t a huge concern for Mainstreet, but Chief Operating Officer Scott White said it saw an opportunity to blaze a trail.

“The crowdfunding platform, we think, has the potential for significant growth, and the opportunity for investors to access opportunities they wouldn’t otherwise access,” White said. “We feel we’re democratizing the process.”

CrowdStreet is hoping to raise $1.5 million from accredited investors. That money would combine with $1.8 million from Mainstreet and a $10 million bank loan to pay for construction. Mainstreet plans to pay investors a 10 percent quarterly return over an 18- to 24-month period, with a potential 4 percent distribution upon completion.

Other startups have already put real estate crowdfunding to use. Washington, D.C.-based Fundrise recently reported it was raising approximately $1 million per week – $25,000 an hour – through crowdfunding. That bodes well for CrowdStreet.

“At this point it’s still a very open market in terms of opportunity,” Steen said. “Any project that gets listed with a crowdfunding platform is a good thing.”

Shortly after the Bloomington opportunity was launched Monday morning, White said Mainstreet had already secured commitments totaling $50,000. For Steen – who formerly worked at tech companies like Janrain and Webtrends – it’s the first wave of a sea change.

“I’ve been watching this space and was really intrigued and interested in how crowdfunding can disrupt some industries that have been around for decades, and transform them for both the supply and demand part of the equation,” he said.

San Francisco-based tech firm Tivix has been developing CrowdStreet’s website for the past year. CrowdStreet co-founder and Vice President of Business Development Darren Powderly, a former broker at Bend-based Compass Commercial Real Estate Services, said Compass was an early financial supporter, as were each of the partners, their families and friends. The group is now in discussions with several venture companies regarding seed money.

CrowdStreet charges developers and owners an up-front fee to advertise their offerings, as well as a small, ongoing subscription fee to pay for the investor-relationship dashboard – a critical ingredient in the company’s platform.

“It’s the ongoing investment relationship management that’s important – not just the access to the deals,” Powderly said.

Another selling point is that CrowdStreet’s fees are roughly 20 percent of the amount that a typical Wall Street investment broker might charge. Powderly thinks the crowdfunding platform will also give people more opportunities to invest in their own communities. CrowdStreet’s next offering will be for shares in a 100-unit student housing complex in Eugene.

The Portland startup is being selective about the companies it partners with, and is working only with those willing to put their own money on the line. That offers security to investors, which is important considering real estate crowdfunding is still in its infancy.

Steen likens the emerging industry to a baseball game that has yet to finish its first inning. Nevertheless, CrowdStreet is swinging for the fences.

“I think it’s going to have a dramatic impact on the real estate investment ecosystem,” Powderly said. “We think this broad-based capital formation that’s not reliant upon a middle man in New York City is really, really important.”

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