Small Change Review

Small Change Review

Small Change Review

I’ve always liked the idea of Small Change. It’s a woman-owned fintech startup in the ‘real estate crowdfunding’ space. (“Fintech” is a buzzy emerging space that combines ‘finance’ and ‘technology’… not, umm, two industries typically celebrated for gender equity).

Small Change’s focus is not strictly on bottom-line return objectives. (Unlike other platforms that have amassed larger user bases and raised more venture capital). The platform’s avowed mission is “changing cities and neighborhoods for the better”.

The Change Index uses data points such as an area’s walk – and bike-ability, public transit access, proximity to green space, availability of commercial and cultural amenities and other measures of quality of life to gauge the possibilities of a project.

Our Change Index keeps us on the straight and narrow.  Offerings on the Small Change platform must score at least 60% to be listed, to ensure that we’re making change right alongside you.

As I’ve noted elsewhere, ESG investing and smart asset allocation are not mutually exclusive. Small Change is devoted to providing socially-beneficial, private-market real estate investments to ESG investors. In my view, this is a fairly unique and welcome offering.

Small Change Ratings

Small Change Review – The Impact Did this product truly adhere to impact investing ideals, or was there a stench of greenwashing?

Suggesting real estate as a form of social impact investment is a thorny proposition. With the simpering man-baby occupying the Oval Office every bit a caricature of a rent-seeking, bloated, undeserving, exploitative real estate developer… I wouldn’t blame any socially-conscious investor for staying clear of real estate.

In my view, you can’t generally say that real estate investment is a social good or a social bad; it depends on the project and the contours of the local real estate market. Will new development (or upgrading of existing stock) create more affordable housing or other opportunity for the pre-existing community, or will it further a cycle of displacement and gentrification? This is a local question, but in all markets and neighborhoods across the country, new supply must be part of the affordable housing solution – in other words, real estate investment must be part of the equation.

Fortunately, Small Change doesn’t have much to hide behind and they don’t seem interested in obfuscating the true intent of the developers with whom they originate investments. You can see the details of projects you consider, including the background of the real estate firm (or ‘sponsor’) with whom you’d be co-investing. This typically includes a social benefit thesis: why and how the project will positively impact the community. In many cases the sponsors behind Small Change investments have a track record in community-minded development and appear genuinely committed to delivering value to people already there, rather than creating new Class A stock to tap into gentrification currents. Each offering memorandum breaks down the social utility that the development and developer seek to provide.

Will these projects have a net positive impact on their communities once completed? It’s too early to tell, but it does appear that the intent is there, and that they have not deviated from their mission of “making cities better”. As noted above, Small Change takes a indexing approach to vetting out the social benefit of projects, only listing those that score above a certain threshold.    

Score: 7/10

Small Change review – Investment Performance Does this ESG investment provide a level of bottom-line performance so as to be viable in a growth portfolio long-term?

To date I’ve only made two investments through the platform:

The Innovation Houses Project in Chicago carries an anticipated term of 3 years.

The projected annual preferred return is 8%, with net IRR in the neighborhood of 30% after a 45/55% split with the Sponsor. All these figures are pretty favorable but, again, a big TBD as far as what the realized return will be on this.

The Bargeboard & Beams project in New Orleans appears to have a less impressive ‘Change Index’ aspiration than the Innovation Houses offering – the investment is into a renovation of a dilapidated shotgun house in the Lower Ninth Ward neighborhood into cooperative housing. Nevertheless, the project aims to create net new affordable units through rehabbing in an urban infill neighborhood. This passes the “non-displacement” sniff test.

The investment projects to a 3-year term, with Small Change investors receiving 50% of available cash flow and 20% of profits upon sale. This is a preferred equity investment, with the developer contributing 58% of project costs in the form of their own equity. So, ostensibly, decent investor protections.   

Per an inquiry I made and some info presented on closed investments (which wasn’t super easy to find), three of Small Change’s early investments that have gone full-cycle have met or exceeded projections. This is heartening, but in my opinion jury’s still out.

I have included my first two investments on the Righteous Money Portfolio page, which I’ll update as I (hopefully) begin receiving distributions. I have invested close to the minimum in these first two offerings, and I will plan on investing larger amounts if these first two being yielding cash flow as projected.

Score: TBD

Small Change review – The User Experience Does investor support, the web app (if applicable) and product features help make your investment experience easier and more fulfilling?

Small Change provides some nice, straightforward info for understanding the risks, the return potential, and the social impact of each investment offered. The ‘Small Change Index’ offers a look at how the development is likely to benefit the local community. This stood out in my Small Change review as a well-structured means of presenting potential social impact.

Overall the experience is fairly transparent, which is always nice for an investing product but particularly essential for an illiquid real estate investment where you are “getting into bed” with the real estate firm for a number of years in most cases. Some of the information regarding return modeling, budgets, and distribution schedules is lighter than I would like to see. However, Small Change likely does this in the interest of not overwhelming investors, rather than to obfuscate any details. Each offering page has a chat section that allows for asking questions directly to the sponsor (the company that originated the investment and is taking on the development). I’ve also made several inquiries to their customer service team that have been addressed promptly.

With a long-dated investment, transparency and communication are essential parts of the user experience. Small Change scores high marks in this regard.

The investment checkout process was fairly seamless and sufficiently encrypted.

Score: 8/10


  • A method of accessing private-market real estate in a socially responsible means
  • A high degree of transparency, including an open question forum to ask questions directly to the sponsor of a given project
  • Some real tangible shit: Small Change allows investors to participate in material changes to the built environment that (hopefully) will benefit residents and communities in neighborhoods that have not been investment targets in the past. Participating in affordable housing initiatives feels much less abstract than, say, allocating more to ESG index funds.
  • Open to both accredited and non-accredited investors


  • Illiquidity: the flip side of accessing a private-market asset that has historically exhibited low degree of correlation with public equities markets. Your money may be tied up for several years (or more). Be sure that you can handle this.
  • Fairly slim track record: as of this writing, the platform has not had many projects go full cycle.
  • Low volume: As of this writing, there seems to generally be no more than 2 live investments on the platform. Greater volume would facilitate diversification.

The Triple-Bottom Line

Small Change is an earnest, forthright attempt to provide socially responsible, private real estate investments to investors who would like to participate in affordable housing and community-minded development initiatives. I am reserving judgment on the return potential of the platform, but otherwise I like what I see from Small Change so far.

I would recommend that all investors seek some exposure to private real estate. After carrying out my Small Change review, I would recommend that any righteous investor interested in real estate give it a look.

Overall Score: 8/10