Risa Davis and her husband, Brent, never wanted to run a bar, let alone a seedy one in St. Johns fraught with crime and drug problems.

But when the Davises moved to the North Portland neighborhood seven years ago, they soon noticed the location of John’s Tavern. It’s at the intersection of North Philadelphia Avenue and Lombard Street (the area’s two main arterials), almost directly in the heart of downtown St. Johns, on a brick- and tree-lined plaza.

So a year ago, Risa (a real estate and marketing professional) and Brent (a Clark County employee) took over the lease with grand plans in mind. They wanted to restore the 111-year-old building and transform it into a boutique hotel. Such an overhaul, they believed, would help spur catalytic change in St. Johns.

But there was a problem.

“We’re not huge developers; we don’t have a lot of money,” Risa Davis said. “There was no way we were going to come up with the 20 percent that we needed for this project on our own. We just don’t have the resources, so we knew originally we were going to have to get investors on board or else it wouldn’t happen.”

Now the Davises are looking for that support on a relatively new and potentially lucrative front – crowdfunding. Through their Central Hotel LLC, Risa and Brent are hoping to join forces with Washington, D.C.-based Fundrise – a startup that gives nonaccredited investors (people who earn less than $200,000 a year) the opportunity to invest in development projects online via Regulation A.

Presently, the simpler Regulation D opportunity is available only to the wealthy; however, this past October the U.S. Securities and Exchange Commission proposed new rules to open real estate investment to nonaccredited investors. The SEC is reviewing public comment on those proposed rules.

In the meantime, Fundrise has been used by developers to raise more than $10 million for more than a dozen projects around the country. The company facilitates those efforts by taking care of the paperwork that typically makes the Regulation A route infeasible.

In Portland, Guerrilla Development was the first to use Fundrise – for its Dumbbell project planned on East Burnside Street. The goal was to raise $1.5 million in equity for the $8.5 million mixed-use project; today, it has commitments totaling approximately $3.2 million from more than 800 people.

Additionally, investors have made tentative commitments totaling approximately $5 million toward future Guerrilla Development projects, said Andres Ochoa, a partner in the company.

“We’re really stoked that this many people, one, took an interest in this project; two, took an interest in this area of Portland that we think has a lot of potential; and three, were willing to make use of this type of funding mechanism to potentially augment the way people are investing in real estate currently,” he said.

Guerrilla and Fundrise have started the long SEC filing process associated with Regulation A (which the proposed new SEC rules would relax). That will take several months, but Guerrilla hopes to break ground by late 2014 or early 2015.

Central Hotel LLC would be the second Portland developer to raise money through Fundrise, but it’s not certain yet. Katlin Jackson, Fundrise vice president of real estate for the Pacific Northwest, said an investor network is still being built online, and the company’s underwriting and approval processes must be navigated prior to a formal offering.

In the past, Fundrise has been selective about the developers it’s chosen to work with, but Jackson said the company is moving toward a more open format so that anyone can create a profile. Once a company attracts 25 people to its investor network, it is listed on the Fundrise website. After attracting 50 people, Fundrise’s underwriting begins.

That’s about where the Central Hotel is at. Jackson said she will speak with the Davises on Friday to learn more about the project and make sure Fundrise’s format is the right venue.

“Now that we’re opening things up it’s much less us choosing (projects), but really trying to let the community choose,” Jackson said.

Jackson said she’s talking with other developers in the Portland area, and said there could be three to five more projects listed on its site in the next five months.

“It feels pretty exciting to be at the nexus of real estate and technology, and I think real estate inherently has not been an innovative industry,” she said. “… It’s fun to be at the precipice, if you will, of rethinking an industry – of the way an industry has been run for years.”

Before taking the Fundrise route, the Davises were planning to make a private offering to three friends willing to commit $50,000 each. Risa Davis said the associated legal fees alone cost $20,000.

Now, they’re hoping to raise $1 million through Fundrise, which charges 3 percent on the capital raise. The minimum buy-in would be $100.

If successful, the Davises would have the necessary money down for an approximately $7 million construction loan. Risa Davis said they’re also looking at other funding sources, including the possibility of EB-5 money via American United Development Group. The total project cost is approximately $9 million, and involves creating an entirely new facade, and adding three floors and a rooftop deck.

The Davises are seeking support from nearby neighbors, and have posted a video touting the project on YouTube (). Meanwhile, they’re weeding out the riffraff at John’s Tavern in an attempt to jump-start a culture change.

“If you were a single woman of any reputable anything, you would not step in the door,” Risa Davis said of the bar in early 2013. “The crowning moment was about four months ago. I was sitting there looking around the bar, and there were 12 people in there, and only one man, and it was my husband.”

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