Millennials have long accepted that it takes them much longer than their parents to save up to buy a home.Join a new group of fintechs that promise retail investors a slice of the wealth pie without having to give up avocado toast! Problem — Most of the time you have to be rich to play.
Some 18 fractional-ownership real estate start-ups have sprung up in Europe in the last four years. Just this month, Berlin-based Myne raised his €23.5 million seed and London-based Lilo raised his €3 million seed.
Don’t call them timeshares.
Partial ownership is nothing new. There have been quite a few iterations in the world of analog real estate over the decades. From crowdsourced new-build properties to timeshares with a 70-year-old aunt’s best friend on the Costa del Sol, the model has been around since his 1960s.
It’s only a matter of time before this concept is adopted into the fintech world, and with the cost of living plaguing the average household, VCs are offering some of the luxury real estate to those who still have the cash. We’re pouring a lot of money into startups, promising to deliver. to spare.
Fractional-owned startups are successful in the US, and the founders of these European copycats use that as proof. For the average household, the idea of buying a second home complete with fluffy towels and running Aesop soap may seem totally irrelevant. It targets the top 10% of income earners who believe they will be relatively immune to a recession.
“75% of the people we surveyed wanted to invest in real estate, but only 15% actually did. It’s too complicated.”
So it’s not fintech for the masses, but wealthy retail investors have a distinct desire to make money. It may be time to shine.
They are divided into two schools. One is slightly closer to the T word (time share); they offer investors a firm slice of ownership by purchasing a portion of the asset. They typically target very wealthy investors looking for his second home that can be used for a month or more each year, with minimum investments starting at around £100,000.
The second school is aimed at a wider investor base, with a minimum investment of just £100. These properties include commercial projects and residential leases, but you can’t vacation there (yet).
So who is doing this in Europe?
Paris-based Louve Invest raised a €2 million seed from investors including Kima Ventures and LocalGlobe last November to build a real estate investment platform. It connects investors with commercial and residential real estate portfolios owned by asset managers, effectively acting as brokers. .
Investors can log into the app, select from various portfolios, and filter according to asset class and region, investment amount and risk profile. Louve is technically “for everyone”, but its user base skews heavily toward high-income earners. Louve did not fund the construction itself. These assets are ready and will generate rental income from the moment people invest.
Louve receives a standard 6% commission from the property portfolio manager when it sells the property portfolio to investors. However, the investor can receive 2.5% cashback on his investment within 60 days.
There are many first-time investors using the platform to invest small amounts, with an average ticket size of €10,000. That said co-founder and CEO Clement Renault, Sifted is being pushed by a sizeable number of investors who have bet more than his €300,000.
“When we were doing the survey, about 75% of the people we surveyed wanted to invest in real estate, but only about 15% actually did it because it was too complicated. because we don’t want to manage tenants,” says Renault.
Louve only offers the ability to invest in these properties at this stage, but Renault says the company already offers several loan facilities and is looking to offer mortgages in 2023. . Most of the properties on the platform are commercial, but we plan to offer more personalized residential properties, and even tenant-investor matching.
Amsterdam-based Brxs takes a slightly different approach by offering only residential real estate on its investment platform.
Investors can buy one share of Brxs property (all leased to tenants) for as little as €100. Traditionally, these types of properties were owned by family offices and banks, but Brxs’ mission is to open up real estate assets to all.
“We recognized our generation [millennials] You may not be able to buy a house until you are 40 or 50. Fragmentary works of art, cryptocurrencies, and stocks can easily be purchased anywhere, but real estate is not on the same level of participation. ‘ her CEO Amrita Ramsaransing tells her Sifted.
Investors can select individual properties to invest in through the Brxs app based on their look and feel. Brxs buys properties directly and all properties are built and ready to lease, unlike crowdsourcing models that often promise properties under development. So far, the average investment amount is €700, and investors receive quarterly payments from rental income proportional to the size of the shares they own.
Meanwhile, London-based Lilo is preparing to launch its first properties on the platform it created to offer ‘invest and experience’ assets.
what does that actually mean? I believe Soho House has a timeshare. It targets millennials with considerable cash reserves, who may already be living in some places, such as tech workers and wealthy creators in Europe.
Lilo has built a portfolio of luxury properties in various locations. She mainly focuses on European cities and may plan to have these young professionals take their time and work remotely. An investor can buy her one-eighth of the property and use it for 30 days a year.
Each property is worth between £1 million and £3 million, so the fraction is around £100,000 to £300,000. The investor pays the property management company a monthly “small maintenance fee”. That way, even their favorite brand of soap will be waiting for them when they rush to the timeshare property for the holidays.
“They’re successful, they’re ambitious, they’re just complementing and enhancing an existing lifestyle,” co-founder Emily Chan tells Sifted. “They can enjoy these beautiful luxury properties while at the same time benefiting from property appraisals.”
Berlin-based Myne has taken a slightly more traditional approach to its second home timeshare offering, with over 30 properties in popular holiday destinations such as the Alps, Canary Islands, Mallorca and Ibiza. has a portfolio of
Like Lilo, the target clientele is wealthy, with a median household income of €100,000 and above, with a minimum investment of €50,000. The property has a market value of €750,000 to he €3 million and can be shared by up to 8 people. Each co-owner’s share is equivalent to 44 days of use per year, either holiday use or rental income.
After the initial investment, co-owners will also pay €99 per month for upkeep of the property and additional expenses such as filling the fridge with their favorite wine.
Myne makes money from managing co-ownership structures and real estate transactions, as well as monthly maintenance fees and commissions charged when one co-owner wants to sell shares to another co-owner.
All of this certainly falls into the luxury category, but Myne co-founders Nikolaus Thomale and Fabian Löhmer told Sifted they aren’t worried the cost of living crisis will affect its staying power.
“We believe that more people will be more cautious about costs and resources and more willing to share where it makes a lot of sense from an economic, social and overhead perspective,” they said. told Sifted.
They’re currently focused on the “financial and emotional return” of the shared second home model, but going further, Myne is looking beyond just financing solutions such as mortgages to the investment side of its products. will also be given more focus.
There are at least 14 startups in Europe that have adopted versions of these two models, including Altacasa, Investown and Vivla. Click here for a professional briefing on fractionization.