Four years after its launch, a Charlotte startup aims to make single-family real estate investing accessible to more than just shareholders with a high net worth.
Mansion Group originally started as a real estate investment company, allowing customers to book single-family, short-term rental space through its Mansion Life app. It now uses AI tech to identify investment homes and owns and manages properties across Charlotte. This spring, the startup expects to more than double its portfolio of rental homes through the launch of Mansion Invest — a platform to transform guests into investors of the homes they book.
The company recently raised $2.5 million in funding, without traditional investment capital, to help develop the business and democratize real estate investing through its platform.
"What we saw was high-net-worth folks had unique access to buy these homes and turn them into rental properties," said John Sutton, founder and CEO at Mansion and former president and chief digital officer at Red Ventures. "It just seemed a bit unfair that we had access to this."
Sutton retired from Red Ventures in July 2021 to pursue Mansion Group full time.
He recognized that technology had minimally affected the real estate sector within the last two decades. Mansion believes that, through technology, there can be an improved approach for enabling retail and institutional investors to become owners of the startup's selection of single family rentals.
"We started looking and saying, 'Is there a way where we could create a product and technology that had the benefit of the Mansion operating model, but allowed the regular investor to own a share of the properties?'" Sutton said.
He said the company saw advantages to allowing the local community to own rental properties and gain access to wealth creation without spending thousands of dollars for a minimum investment.
"We're trying to build an experience where we want people have an emotional connection to the home, whether it be because they're local, because they like the area or because they like the house," Sutton said. "If we can do that successfully, then I think we'll have something a bit different than the regular financial investment space."
Sutton said a $600,000 home would typically require a roughly 20% to 25% down payment. Through Mansion, local residents, guests and renters can own a stake in Charlotte-area rental homes for as low as $9 per share. The minimum investment is roughly $99, according to the company.
Mansion's shareholders have the opportunity to earn dividend-yielding, passive income with 4% to 8% targeted annual dividends for most offerings, the company says. Investors can also earn a share of any home appreciation in the event of a sale.
The Mansion Invest platform comes as investors seek to diversify their portfolios after losses throughout 2022. The company recognized that majority of large institutional funds were purchasing several local rental homes amid the high-interest-rate environment. The startup is looking to make the passive income opportunity available to more people.
"Our focus is we don't want to build a product backed by corporate investors at the highest level," Sutton said. "We want the person we're serving to be the consumer."
Mansion fully owns 15 properties locally. Once the company owns and invests in about 50 homes, it plans to expand into other markets, Sutton said. The startup's network of homes typically include three-bedroom or larger properties.
After the Mansion Invest platform launches, Sutton said the company plans to work on providing a path for people to gain liquidity in a shorter period of time.
"Maybe it's a good thing if investors are buying homes, but maybe it's a better thing if those investors are tied to that community," he said.
