US-based Here lets you make fractional vacation rental investments starting at $100 – TechCrunch

Airbnb started out as a place where homeowners casually rented out rooms and more from their own private homes to make a little extra income, but it quickly evolved into something a little more specialized: a platform where much of the inventory became listings from those who owned property primarily as an investment vehicle. Now a US startup called Here is announcing some funding to build a democratizing twist on the provider side of that equation: a platform that lets people become partial investors in these vacation rentals, starting with stakes as low as $100.

Here, it secured a $5 million seed round led by Fiat Ventures, with participation from Joe Montana’s Liquid 2 Ventures, Mucker Capital, Basecamp Ventures and Cooley, bringing its total raised to date to $7 million, including a first round of funding earlier this year year. Here we use this latest capital injection to invest in market growth, consumer growth and product. It will make property acquisitions for the platform using debt raised separately from that capital.

Corey Ashton Walters, founder and CEO of the Miami, Florida-based startup, said that when Airbnb was preparing to go public in 2020, he was looking for new venture ideas in the real estate sector. He took inspiration from property investment portal Roofstock and art investment platform Masterworks to create a new startup that allows retail investors to “own shares” of a vacation rental home with as little as a $100 investment.

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“Vacation rentals are an investment opportunity that has historically only been available to the wealthy. Here has created a seamless and easy way for everyday investors to participate in this market, and supporting their mission to open up this opportunity to everyone was an easy decision,” said Adam Nash, CEO and co-founder of Daffy and former CEO of Wealthfront, in statement who is an angel investor in the company.

To be perfectly clear, this is not a timeshare: you can’t reserve some time off to stay in the property as an investor; here it is only about investing in the property to extract dividends from other tenants and from potential property sales.

Nor is part-investing in homes with others an entirely unique idea. There are other startups, like US-based Pacaso — which has raised over $1.5 billion to date according to Crunchbase — and Mexico-based Kocomo that let you have partial ownership of a vacation home. And in the US and other markets there are REITs, trusts where investors back real estate plays.

The twist here is the low barrier to entry, $100, versus potentially thousands of dollars on the other platforms.

Fractional investing is a very strong theme in the fintech world, where it’s being used by neo-banks and others to give consumers a way to buy chunks of shares in prime stocks that would otherwise be too prohibitive to spend. Others like Raleigh have taken the idea and applied it to the world of collectibles.

Here’s how the model works: the company acquires a property and makes it “rent-ready” through its own investments. It then lists it in an IPO for investors at a price that includes all those costs. All properties adhere to the $1 = 1 share of property rule. Once all stock is sold out, Here places it on various vacation rental portals such as Airbnb, Homeaway and for stays. It then pays quarterly dividends to investors from the profits earned on that property during the period.

The goal is to hold a vacation rental property for five to seven years and then sell it on the market. Shareholders will receive payouts based on their respective shares in the property. The company deducts maintenance costs from dividends and final appreciation before cash is distributed to investors.

So how does Here make money? Ashton Walters said the company collects a 1% to 10% supply fee based on the acquisition price – similar to a real estate agent’s fees – when a house is listed as an investment. The company also charges a 1% annual asset management fee for the property. It also has a minimum of 1% ownership to have some “skin in the game” so that other investors can put money in with confidence.

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Here officially opened its portal to the public earlier and listed three properties in Bear, California, Clearwater, Florida, and Gatlinburg, Tennessee, with a fourth going live soon. There are currently more than 30,000 registered on the site, with 1,000 of them being active investors. Ashton Walters said that a listing typically has 400-500 investment slots, so it’s difficult to accommodate all users.

To comply with regulatory requirements, the company mentions all investment variables in its SEC circular. Before listing the property for investment on Here, the company acquires it and submits the proposal to the SEC for approval. Each property is held under an LLC, which protects investors from personal liability in the event of loan default or bank foreclosure.

There are some things that investors should consider while investing here. The company says it uses a mixed model of equity and debt financing to acquire homes. Although it buys some properties outright, others have a mortgage component. It is claimed here that all this information is disclosed on the offer page and the official offer circular.

There is the matter of ROI when the housing market crashes. Tuk said he intended to hold on indefinitely through the downturn. “The idea is not just to survive a downturn, but to live through it,” it said. The firm also noted that often when home prices fall, rents rise, so it hopes the properties will generate more cash flow for investors during the downturn.

The company is ambitiously looking to expand its range of offerings to launch 70-100 properties in 20 vacation destinations such as New York’s Hudson Valley and Pennsylvania’s Pocono Mountains next year. He also plans to launch his own Airbnb competitor, where he will list the properties he owns for members and the general public in the future.

“We’ve stopped ad spend for the last 60 days because we don’t have enough supply to meet demand. Our last listing sold out in five hours. Short-term rentals have the defining moment to be recognized as an asset class. So our goal is to conquer the market and become a trusted brand in this space,” said Ashton Walters.

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