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You can’t afford a house, but you can probably afford Nada – TechCrunch


Rents are rising in cities across the United States, but the national homeownership rate has steadily fallen as potential buyers grapple with low supply, weakened purchasing power and record costs . What if there was a way to invest in a city’s real estate market that you think is growing even if you can’t afford to buy property there?

That’s the idea behind Nada, a Dallas-based fintech platform whose goal is to expand access to real estate wealth. The company offers index-like real estate investment products called “Cityfunds” that allow anyone, including non-accredited investors, to buy in a city’s real estate market with a minimum of $250, the CEO said. and co-founder John Green at TechCrunch.

Currently, the company offers funds focused on the Dallas, Austin and Miami markets and plans to launch six new Cityfunds over the next twelve months, Green said. Through this offering, Nada aims to raise $75 million from retail investors by offering funds focused on new cities, he added. The first will be Tampa, which Green says Nada plans to launch by the end of this month.

John Green, Founder and CEO of Nada Picture credits: Nope

It should be noted that Nada is not only focused on capturing clients who want to invest in the real estate market. Its other target customers are homeowners who want to spend their home equity on day-to-day expenses, which they will be able to do using Nada’s real estate-backed debit card, Green said. The company plans to launch the card by the first quarter of next year, he added.

Typically, homeowners can access the equity in their home through a line of credit (called a HELOC) that they draw on to fund big expenses like renovations or education costs, or to consolidate debt. at a lower interest rate. It’s a loan product that tends to earn interest at high rates, and with interest rates rising across the board, Green explained, customers will be looking for other ways to access the equity in their property.

With Nada’s card, spending home equity is treated as an equity investment rather than debt and does not affect the user’s credit capacity or require interest payments, Green said. So how does it work ?

“It’s just that we have an equity position as a co-investor alongside the owner,” Green said. “When the appreciation of the house goes up or down, our percentage is the same. And so, as a homeowner, if you’re looking to get cash out of your home, it might be a bit tricky to do that today given today’s interest rate market, and that’s a product which is not directly affected.

Nada will be able to offer the card through a banking partnership, although Green did not reveal which bank he plans to use for this. Users will also be able to earn cash back when using the card, according to Green.

Beyond the new Cityfunds offerings, which Green likened to a mini-IPO, and the launch of the card, the company eventually plans to create a secondary trading platform, launch a mobile app, and launch the card. offer a reward feature that distributes shares to users.

To that end, the company just raised $8.1 million from investors for its funding round led by LiveOak Venture Partners. Other fundraising participants included Revolution’s Rise of the Rest Seed Fund, Capital Factory, 7BC Venture Capital, Sweater Ventures, LFG Ventures, Badra Capital and Stonks Fund, according to the company.

Images of Nada's yet to be released mobile investment app

Images of Nada’s yet to be released mobile investment app Picture credits: Nope

The company also announced that Krishna Srinivasan, founding partner of LiveOak, and Jesse Stein, co-founder of metaverse real estate company Everyrealm, will join its board of directors. Nada originally launched its Cityfunds product in partnership with investment platform Republic, according to Green, which Everyrealm parted ways with six months ago. Green noted that Nada herself has no plans to expand outside of real-world physical assets.

Nada generates income on a transaction basis and by charging its fund investors a fee of 1.5% per annum, slightly lower than the 2% fee typically charged by other alternative asset managers, including corporates. venture capital and private equity, Green said.

Ultimately, Nada’s advantage comes from its ability to capitalize on declining homeownership rates by offering clients another way to gain exposure to the real estate market. Its debit card, if all goes according to plan, will also provide financial flexibility that could be very attractive to owners.

“We’re not looking to create products that are purely transactional. We want to build this relational partnership with a real estate owner/consumer as an asset. And so long term, what we want to have is that our customers see the ability to transfer money from their home equity into a spending account similar to how they would with [moving] check savings, to have that amount of cash and access the product,” Green said.

Tech

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