Home News Got $5? These startups allow for investments in slices of real estate • TechCrunch

Got $5? These startups allow for investments in slices of real estate • TechCrunch

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real estate is the world’s largest asset class, yet largely inaccessible to non-institutional investors. Buying real estate for individuals often requires a large amount of capital, and coupled with the industry’s reliance on manual, outdated processes, it can be a daunting prospect for individual investors looking to gain exposure to real estate. presents a substantial barrier to entry.

These challenges are compounded for investors who are excluded from most private real estate investment opportunities because they are not accredited investors. (U.S. Securities and Exchange Commission rules require an accredited investor to have a net worth of $1 million or more, or a personal annual income of hers of $200,000 or more.)

“Owning real estate is the single greatest source of wealth creation and is out of reach for most Americans. ,” said Yishai Cohen, co-founder and CEO of Landa. told TechCrunch in August.

In the United States, homeownership rates are steadily declining as prospective buyers grapple with supply shortages, weakening purchasing power and record high costs. Communities of color, in particular, will face yet another setback in their ability to build intergenerational wealth if current housing policies remain unchanged. According to a study by the Urban Institute.

While many of the barriers to homeownership stem from policy decisions, startups like Landa are working to help people access real estate wealth through alternative avenues of investment. Investing in real estate stocks is obviously not a perfect alternative to buying it, but it can be a more accessible entry point into the real estate market.

It’s worth noting that REITs (Real Estate Investment Trusts) exist to solve similar access problems. REITs are listed vehicles that allow individuals to invest in portfolios of real estate, but are limited in scope by very specific regulations and may have different return profiles than private real estate. . Build new solutions.

The need for greater access to real estate is driving, in part, a boom in funding for technology in the sector. Real estate-related venture capital funding will hit a record in 2021, with 219 deals raising more than $5 billion in capital. According to pitchbook dataOver the past six months, TechCrunch has featured new venture funding rounds from at least four different startups that are using technology to offer real estate investments to uncertified investors.

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