Millions of Americans dream of becoming real estate investors, but it’s safe to say they can’t or can’t because of a variety of issues, including certifications, funding, and lack of time.
So it’s no surprise that recent years have seen a flurry of start-ups aimed at making real estate ownership available to more people in the form of split shares.
One such startup Landahas emerged from stealth with $33 million in funding, including a recent $25 million Series A round and an $8 million seed round. NFX, 83 North, Viola co-led the A Series A for a New York company that closed in the first quarter of this year. 83North and NFX co-led the seed round.
CEO Yishai Cohen and CTO Amit Assaraf founded Landa in 2019 to make real estate ownership more inclusive.
“Owning real estate is the single greatest source of wealth creation and is out of reach for most Americans. “So we were brainstorming ways to lower the barriers to entry in real estate and give more people access to the asset class,” Cohen said in an interview with TechCrunch.
And so Landa was born.
Until the end of last year, Cohen said the company was mostly “going through the regulatory process.” So we are just starting to see significant growth this year. Specifically, Landa has grown from 600 to nearly 25,000 investors using his app in 2022.
These users have invested in nearly 400 properties using the Landa app.startup It currently has facilities in Atlanta and New York City, with upcoming launches in Charlotte, Birmingham, Tampa, Orlando and Jacksonville, Florida.
Cohen said the company’s goal with its latest capital is to scale and attract “more investors in more markets.” Landa has also secured $60 million in debt financing for market expansion.
The mechanics are similar to other partial property ownership startups, and this model in particular is very similar to Arrived’s model. Arrived allows people, including unlicensed investors, to invest in rental property stock “for as little as $100.”that startup Raises $25 million Series A led by Forerunner Ventures Bezos Expeditions, Jeff Bezos’ personal investment firm. TechCrunch previously reported fraction When finterwhich also focuses on residential real estate.
For Landa, the only requirement for an investor is to be 18 years of age or older and a U.S. resident. With as little as $5, they can start investing, buy and sell stocks, and see real-time property updates from the Landa app.
But how much money can you make with such a small investment?
“People start low and build their accounts over time,” says Cohen. “A $5 entry point allows them to build confidence over time and grow their portfolio as they become comfortable.”
On the back end, Landa has deliberately chosen not to partner with REITS or funds with existing real estate businesses, he said.
“We built our own team on site to do maintenance, property management, and build apps for residents,” added Cohen. “We are automated and use code for all the behind-the-scenes processes such as acquisition.”
Like Arrived, Landa set up an LLC to buy physical properties, which sell for as little as $130,000 for single-family homes and just under $3 million for multifamily investments.
Landa makes money by taking a 6% acquisition fee on purchases. We also keep his 8% of gross rent on a monthly basis to cover property management costs. Landa is a property manager herself, so she makes a profit on these fees as well.
“We focus on properties that generate good dividends and good rental income,” Cohen said. “We look for properties that are ready to rent or need some light work. We focus on cap rates and markets that can generate income.”
Landa currently has 46 employees and is headquartered in New York.
NFX founding partner Gigi Levy-Weiss said he’d known Cohen since he was 16 and founded his first company, Smartbus. B2B marketplace for bus companies acquired in 2016.
“When we reunite with Landa to discuss how they will improve accessibility for investing in the $43 trillion U.S. residential real estate market, this is what we have to be part of. “Since then, Yishai and Landa have shown an amazing ability to innovate in almost every aspect of this market…”
Interestingly, rental-focused startups seem to be getting more traction and investor attention than homebuy-focused startups.
Reali, a “buy before you sell” startup, began the process of closing last week after raising $100 million in venture funding just over a year ago. Digital mortgage lender Better.com is reportedly planning his fourth layoff in nine months as of last week. However, he’s not the only two companies facing challenges in the real estate tech world. Earlier this month, another “buy before you sell” startup Homeward laid off 20% of the staffRedfin and Compass Release more than 900 people in total Mid-June. Homie online brokerage in February laid off about a third of the staffor about 90-100 people.
My weekly fintech newsletter, The Interchange, was published on May 1st.sign up here Receive in your inbox.