Rents are going up in cities across the U.S., but the national homeownership rate has been steadily declining as prospective buyers grapple with low supply, weakened purchasing power and record high costs. If there was a way to invest in a city's home equity market even if you can't afford a home there, what would you do?
Nada is a Dallas-based platform that wants to widen access to real estate wealth by using technology. The company offers index-like real estate investment products called "Cityfunds" that allow anyone to buy into a city's home equity market with a minimum of $250 dollars.
Green said that the company plans to launch six new Cityfunds in the next year. The funds focused on new cities will raise $75 million from retail investors. Green says that the first one will be in Florida and will be launched by the end of the month.
John Green is the founder and CEO of the company.
The real estate market is not only focused on capturing customers who want to invest in it, but also on capturing customers who want to sell their property. Homeowners who want to spend their home equity on everyday costs will be its other target customers. He said that the card would be launched in the first quarter of next year.
Typically, homeowners can access their home equity through a line of credit that they use to fund big expenses such as renovation or educational costs, or to consolidate their debt at a lower interest rate. Green said that with interest rates rising, customers will look to alternative ways to access their home equity.
Green said that spending home equity is treated as an investment rather than a debt and doesn't affect the user's credit capacity. How does that happen?
We have an equity position as a co-investor with the homeowner. Our percentage is the same when the home's appreciation goes up or down. Considering the current interest rate market, if you are looking to get cash out of your home, today may be a little sensitive to do so.
Green did not reveal which bank it would use for the banking partnership, but he did say that the card would be offered through a partnership. Cash back rewards will be earned when using the card.
Beyond the new Cityfunds offerings, which Green likened to a mini-IPO, the company eventually plans to build out a secondary trading platform, a mobile app and a rewards function that distributes shares to users.
The company raised $8.1 million from investors for its seed round. The Revolution's Rise of the Rest Seed Fund was one of the participants in the fundraise.
There are images of a mobile investment app.
Jesse Stein, co- founder of metaverse real estate company Everyrealm, will join the company's board of directors. Green said that Everyrealm was spun out of Republic six months ago. Green said that there were no plans to expand outside of physical, real world assets.
The 2% fee charged by other alternative asset managers, including venture capital and private equity firms, is slightly higher than the 1.5% fee charged by Nada.
Nada is able to take advantage of declining homeownership rates by giving customers an alternative way to get exposure to the real estate market. If all goes according to plan, the debit card will give homeowners financial flexibility.
We are not interested in building products that are transactional. We would like to build a relationship with a homeowner and consumer in real estate. Green said that they want to have the ability for customers to move money from their home equity into a spending account, similar to how they would move savings into checking.
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